Goldman Sachs will lose billions short term on Trump tax reform

Goldman Sachs is warning President Trump's tax legislation changes will knock billions from its earnings.

In a filing to US regulators, the investment giant says its fourth quarter results, due in January, will be $5bn (£3.7bn) lower than expected.

It says two thirds of this is down to revisions to US corporate income tax.

Its warning follows similar ones from Shell and Barclays. Both these companies said the reforms would eventually increase earnings.

The Tax Cuts and Jobs Act, brought in by President Trump on December 22, will see corporate tax rates falling from 35% to 21%.

Alongside new restrictions on shifting profits abroad, the cut is likely to lead to a major repatriation of US business profits that are at present being sheltered offshore.

For example, the changes, the most significant in 30 years, would allow Apple to bring back the $250bn it holds abroad without a significant hit to its tax bill.

Individual taxes will also be cut, but more modestly.