A limit on bonuses in the financial sector will be removed to make London more attractive to global banks, chancellor Quasi Quarteng has announced.
The cap, introduced by the European Union in the wake of the 2008 financial crash, bankers’ annual payouts are capped at twice their salary.
The end of the measure was confirmed as part of Mr. Kwarteng’s so-called mini-budget, intended to come back from the cost of living crisis due to ‘growth-oriented’ policies.
A massive government support package to keep household energy bills frozen at an average of £2,500 was confirmed, along with tax cuts and other policies.
He promised the strategy would turn the ‘vicious cycle of stagnation in the UK into a virtuous cycle of growth’.
Reforms on the ‘supply side’, such as a major boost to ‘get Britain building’ with new housing and infrastructure projects.
Mr. Kwarteng also confirmed ‘regulatory reforms’ that could relax the rules governing urban investment firms.
The government has drawn criticism for increasing City bonuses at a time when many families will face the greatest cost of living in a generation this winter.
Before the announcement, Andrew Sentance, a former member of the Bank of England’s monetary policy committee, said it could benefit the economy in a few years, but was “ill-timed”.
He told BBC Radio 4: ‘It sends a rather confused signal when people are squeezed in terms of the cost of living and the government is trying to encourage wage moderation in the public sector’.
“So it doesn’t seem timed right to look like bankers can get bigger bonuses at the same time.
“There may be some longer term arguments for this policy, but I think the timing would be really bad if they did it now.”
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