Labour's plans to hike taxes on banks will push up mortgage rates, the Conservatives warned on Sunday.
They urged Chancellor John Healey to drop plans to push Britain's record tax burden even higher.
He is set to levy billions of pounds in extra taxes on the big banks as he scrambles around for cash in Wednesday's Budget.
He will argue the raid on the heavily-taxed sector is justified by bumper profits.
But Shadow Chancellor Andrew Griffith warned yesterday that the plan would backfire on homeowners and businesses.
He told Times Radio: 'It sounds great, doesn't it, putting up taxes on banks? But what does that mean? It means mortgage rates which are already extremely high will have to increase to compensate banks for that higher level of tax.'
Labour's former cost-of-living tsar Richard Walker also warned against another tax raid on business, including banks.
The Iceland supermarket boss and Labour peer said: 'It is really complicated, hard and expensive to do business right now and I don't think many in government understand that.
John Healey during a visit to Shell UK's St Fergus Gas Terminal in Peterhead, Aberdeenshire
'We need to be making it easier for businesses to grow... at the moment it is the opposite. Business is not an endless piggy bank that can be squeezed.'
In a further blow, the Treasury's entrepreneurship tsar Alex Depledge criticised the government for failing to focus on the businesses of the future – as she revealed she will quit this week.
The tech entrepreneur likened her arrival at the Treasury last year to 'organ rejection' as officials initially tried to sideline her.
She said entrepreneurs were treated as a 'sideshow' compared to legacy industries such as car-making and steel production.
Her departure embarrasses Mr Healey who said his Budget would be aimed at helping 'bloody-minded entrepreneurs' grow businesses and the economy.