London Daily

Focus on the big picture.
Thursday, Jul 02, 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
UK Government Confirms Rejected Asylum Seekers to Remain Amid Enforcement Challenges
UK-China Economic Talks Focus on Services Trade and High-Value Sectors
Buckingham Palace Revamp Plans Unveiled to Modernise Royal and Public Facilities
Two Dead After Light Aircraft Crash in Essex Field, Investigation Underway
Princess Diana Marked at 65 With UK Tributes Reflecting on Her Public Legacy
England Teachers Face New Pay Cap Rules for Academy School Leaders Under Education Reform
Dublin Security Alert Escalates After Stabbing and Reports of Transport Disruption
UK Government Faces Scrutiny Over £10,000 Asylum Living Cost Contribution Requirement
England Prepares World Cup Knockout Match Against Democratic Republic of Congo
Northern Rail Project Warned of HS2-Style Cost Risks by UK Parliamentary Committee
UK Tightens Asylum Rules as Most Rejected Applicants Expected to Remain in Country
UK Heat Health Alert Issued as Temperatures Expected to Exceed 30°C Across England
Halifax Brand to Disappear From UK High Streets in Lloyds Banking Group Restructuring
England Teachers Receive 6.6 Percent Pay Rise Over Two Years as Schools Warn of Budget Strain
UK Defence Spending Plan Sparks Budget Clash as Regional Infrastructure Projects Face Pressure
Inquest Continues in Northern Ireland into Death of Noah Donohoe in Belfast
UK Travel Industry Calls for Suspension of New EU Border System During Peak Holiday Season
Telegraph Media Group Acquired by German Media Firm in £575 Million Deal Completion
House of Commons Warns Northern Rail Upgrade Risks Repeating High-Speed 2 Cost Overruns
UK Transport Unions Warn of Summer Strike Action Over Pay Disputes
UK Health Secretary Calls Maternity Care Review a “Watershed Moment” for NHS Reform
Nigel Farage Faces Questions Over £270,000 Payment Linked to Gold Marketing Firm
Labour Government Faces Internal Division Over North Sea Oil and Gas Policy Direction
National Screening Committee Invites New Proposals for UK Health Screening Programmes
UK and China Hold Industrial Strategy Talks on Trade and Export Growth Opportunities
UK Defence Funding Gap Widens as £4.7 Billion Shortfall Puts Pressure on Spending Priorities
United Kingdom Faces Historic Demographic Shift as Deaths Forecast to Exceed Births in England and Wales
United Kingdom Introduces Major Motability Scheme Reforms Targeting £1 Billion in Long-Term Savings
Global Billionaire Numbers Rise 13 Percent Amid Artificial Intelligence Stock Boom
Body of Fifteen-Year-Old Boy Recovered from Manchester Reservoir
Major Rail Disruption in UK After Cows Stray Onto Intercity Tracks
UK Launches National Campaign to Reduce Water Consumption After Heatwave
Foreign Secretary David Lammy Raises Case of UK Woman Death with US Authorities
Shetland Islands Council Approves Subsea Tunnel Plans Linking Major Islands
Telegraph Media Group Takeover by German-Led Consortium Completed
Resident Doctors in England Accept Government Pay and Conditions Deal
Andy Burnham Sets Out Ten-Year Economic Vision Amid Labour Leadership Debate
Asylum Seekers in UK Face £10,000 Contribution Requirement Under New Law
UK Government Moves to Break Apple and Google App Store Dominance
New UK Steel Tariffs and Import Quotas Aim to Shield Domestic Industry
Damning Report Exposes Failures in Maternity and Neonatal Care Across England
Government Data Reveals Five Billion Pound Shortfall in UK Defence Budget
Prime Minister Keir Starmer Unveils Three Hundred Billion Pound Defence Investment Plan
UK Crime and Policing Act 2026 Comes into Force with New Justice System Reforms
UK Prime Minister Hosts NATO Secretary General Mark Rutte for Security Talks at Downing Street
UK Tightens Oversight of Emissions Trading Scheme Through New Ministerial Directions
UK Issues Statement at UN Security Council on Violence in the West Bank
UK Environment Agency Clears Illegal Waste Site in West Yorkshire After Court Action
UK Resident Sentenced for Fraudulently Claiming £30,000 in Covid Business Loans
UK Launches Taskforce to Help Young People Claim Dormant Child Trust Fund Savings
×