Shares in British banks were down on the FTSE 100 in morning trading as investors continued to take in the impact of the Emergency Budget of the new coalition government, announced on Tuesday.

The Budget, announced by Chancellor George Osborne, introduced a raft of austerity measures with cuts across the public sector, especially on the welfare budget. Mr Osborne also introduced tax increases, with VAT going up to 20 per cent and Capital Gains Tax rising to 28 per cent.

The introduction of a lower than expected bank levy briefly helped shares in part-nationalised banks Lloyds Banking Group and RBS but today shares took a turn for the worse.

By 10:19 shares in Lloyds Banking Group were down 1.69 per cent to 57.71 pence per share, RBS shares declined 2.08 per cent to 45.75 pence per share, Barclays shares dropped 1.71 per cent to 295.65 pence per share and HSBC shares fell 0.92 per cent to 645.80 per share.

Overall the FTSE 100 was down 0.88 per cent to 5,132.75.