London Daily

Focus on the big picture.
Friday, Apr 03, 2026

Chancellor may scrap cap on bankers' bonuses to boost City's competitiveness

Chancellor may scrap cap on bankers' bonuses to boost City's competitiveness

Kwasi Kwarteng is expected to outline next week a series of measures, including tax cuts, aimed at boosting the UK economy in line with the PM's Tory leadership campaign assertion that recession is not inevitable.

Chancellor Kwasi Kwarteng is considering a plan to scrap caps on bankers' bonuses as part of a post-Brexit bid to boost the City's competitiveness and the UK economy, Sky News understands.

He argues the cap, which was introduced under EU rules in 2014 following the 2008 financial crisis and subsequent eurozone debt crisis, would make London a more attractive destination for top global talent.

The measure, first reported by the Financial Times, was always opposed by the UK on the grounds that it would damage London's standing as a global financial hub.

But the idea of ditching the cap was dropped by Boris Johnson's government on the grounds it would be politically difficult to support wealthy bankers at a time of a cost of living crisis.

Mr Kwarteng, appointed chancellor by new prime minister Liz Truss following her victory over ex-Number 11 inhabitant Rishi Sunak in the Tory leadership contest, would set the move in the context of the energy bill aid for households and businesses, the FT report added.

It could also be defended on the basis that Paris is offering an incentive - a 30% income tax rate - to attract investment banking professionals to the French capital.

The fear within Number 11 Downing St would be that any brain drain across the Channel would be to the detriment of UK tax revenues.

He is expected to outline to MPs next week the details of further support through the PM's long-promised tax cuts to help boost spending and growth in the economy.

Sky News reported last week that the chancellor was holding talks with bank bosses to outline the new administration's approach.

The chancellor met City leaders at the Treasury last week


It is not known whether a need to overturn the cap was impressed on him during that meeting.

Banks have long argued that the EU rule pushes up base salaries in London to secure talent, making the likes of New York and Hong Kong more attractive in terms of their fixed costs.

Critics say that uncapped bonuses only encourage personnel to take more risks.

Sky News has contacted the Treasury for a statement.

The union reaction was predictably critical.

Unite general secretary, Sharon Graham, said: "Workers will be appalled and angry at these plans.

"When millions are struggling to feed their families and keep the lights on, the government's priority appears to be boosting the telephone number salaries of their friends in the city.

"Britain's economy is now dominated by rampant profiteering. Removing the cap on banker's bonuses will make that worse.

"Last year Britain's banks made £45.6bn of profits. So the Chancellor's signal to the city is 'let it rip' further and further, while the Bank of England lectures workers about pay restraint. You could not make it up."

Newsletter

Related Articles

0:00
0:00
Close
Trump’s Strategic Pressure on UK Seen as Push for Stronger Alignment and Fairer Terms
UK Focuses on Trade Finance to Secure Critical Materials for Defence and Energy Sectors
Majority of UK Businesses Hit by Middle East Conflict While Confidence Holds Firm
UK Royal Navy Faces Renewed Scrutiny as Debate Intensifies Over Capability and Readiness
Reform UK Faces Mounting Distractions as Policy Agenda Struggles to Gain Traction
Investigation Launched Into Northern Cyprus IVF Clinics After UK Families Receive Incorrect Sperm
International Meeting Issues Unified Call to Safeguard Navigation Through Strait of Hormuz
Potential Strait of Hormuz Closure Raises Concerns Over UK Food and Medicine Supply Chains
UK Leads Coalition of Over Forty Nations Urging Iran to Reopen Strait of Hormuz
UK Secures Tariff-Free Access for Medicines in Landmark US Pharma Trade Agreement
King Charles III Invited to Address Joint Session of U.S. Congress in Rare Diplomatic Honor
Debate Grows Over Whether Expanded North Sea Drilling Can Reduce UK Energy Bills
UK Faces Heightened Risk of Jet Fuel Shortages, Airline Chief Warns
UK Ends Police Investigations into Lawful Social Media Posts After Review Finds Overreach
Abramovich Moves to Establish Charity for Frozen Chelsea Sale Proceeds Amid UK Dispute
Starmer Reaffirms NATO Commitment While Responding to Trump’s Strategic Critique
UK Aid Reductions Raise Fears of Severe Human Impact Across Parts of Africa
UK Signals Renewed Push for EU Cooperation as Iran Conflict Reshapes Security Landscape
Bank of England Signals Caution as Bailey Advises Markets Against Expecting Rate Hikes
UK to Convene Global Coalition to Restore Shipping Through Strait of Hormuz
Trump Signals Possible NATO Reassessment, Emphasizes Stronger U.S. Strategic Autonomy
Australia Joins British-Led Efforts to Reopen Strait of Hormuz Amid Escalating Tensions
King Charles Plans US State Visit as UK Strengthens Ties with Trump Leadership
UK Regulator Launches Investigation Into Microsoft’s Business Software Practices
Kanye West Set for High-Profile Return to UK Stage at Wireless Festival
Trump Presses Europe to Strengthen Commitment as Iran Conflict Escalates
UK to Deploy Additional Troops to Middle East Amid Rising Regional Tensions
UK Authorities Face Claims of Heavy-Handed Measures in Monitoring Released Pro-Palestine Activists
Trump Calls on UK to Secure Its Own Energy as Iran Conflict Intensifies
Nigel Farage Declines Invitation to UK Conservative Conference Led by Liz Truss
Trump Warns Allies to Take Responsibility as Rift Deepens with UK and France Over Iran Conflict
How Britain’s Prime Minister Controls U.S. Bomber Access in Escalating Iran Conflict
Trump Urges Allies to Secure Their Own Oil Supplies as Hormuz Crisis Disrupts Global Energy
Russia Expels British Diplomat as UK Pushes Back Against Pressure
White House App Faces Scrutiny After Claims of Continuous User Location Tracking
BBC Faces Scrutiny Over Allegations of Paid Content Linked to Saudi Arabia
UK-France Coastal Patrol Agreement Nears Breakdown Amid Migration Pressures
UK Police Detain Pro-Palestine Activist Again Weeks After Bail Release
FTSE 100 Advances as Energy and Mining Shares Gain Amid Middle East Tensions
Eli Lilly Seeks UK Pricing Deal to Unlock Renewed Pharmaceutical Investment
Three Arrested in UK After Massive Cocaine Haul Discovered Hidden in Banana Shipment
UK Fuel Prices Poised for Further Surge Amid Global Energy Pressures
Apple Subsidiary Penalized by UK Authorities for Breach of Moscow Sanctions
Western Allies Intensify Coordinated Sanctions Strategy Against Russia
UK Lawmakers Face Criticism Over Renewed Push for Social Media Restrictions
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
×