London Daily

Focus on the big picture.
Friday, Oct 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 Councils to Receive Sweeping Planning Powers to Ban New Vape and Betting Shops
Chancellor John Healey Faces Tax and Pension Scrutiny Ahead of Autumn Budget
Metropolitan Police Apologise for Accidental Disclosure in High-Profile Investigation
UK Universities Report Record International Enrolment as Housing Pressure Grows
UK Logistics Firms Monitor Rhine Disruption as Low Water Threatens European Supply Chains
UK Food Industry Warns Inflation Could Approach 7%
UK Introduces Vaping Duty and Mandatory Retail Stamps
Scotland Raises Property Taxes and Expands Child Payment in Annual Budget
Greggs Plans Four Factory Closures With 740 Jobs at Risk
OECD Raises UK 2026 Growth Forecast to 1.1%
UK Inflation Rises to 3.1% as Bank of England Faces Rate Debate
Andy Burnham Criticises Brexit and Says Rejoining EU Single Market Remains an Option
UK Imposes New Sanctions on Russian Military Networks and Propagandists
UK Launches Nationwide Early-Release Prison Scheme
Andy Burnham Says Security Services See Signs of Iranian Involvement in RAF Fairford Incident
Manchester City Found Guilty on Premier League Financial Charges After Independent Investigation
Scottish Court to Rule on Bid to Force No-Confidence Vote Against Aberdeen Council Co-Leader
UK Bans Extra Charges for Seating Children Under 12 Beside Accompanying Adults
UK Introduces Vaping Duty and New Licensing Requirements
Greggs to Close Four UK Factories and Cut 740 Jobs
Hundreds of Prisoners Released Early as England and Wales Prisons Reach 98% Capacity
UK Unveils New Russia Sanctions Targeting War Funding and Shadow Fleet
Burnham Says There Are Strong Indications of Iranian Involvement in RAF Fairford Security Breach
Prime Minister Andy Burnham Raises Prospect of Reviewing Britain's Post-Brexit EU Relationship
Markets Price in Bank of England Rate Increases as Inflation Rises to 3.1%
UK Borrowing Costs Climb Toward 5.5% as Global Bond Sell-Off Intensifies
UK-France One-In-One-Out Migration Agreement Expires as London Seeks Alternative Measures
Southwest England Faces Flood Alerts After Heavy Autumn Storms
UK Expands Funding for Rapid Electric Vehicle Charging Infrastructure
Welsh Government Approves Funding to Upgrade South Wales Transport
Northern Ireland Tensions Rise as Orange Order Rejects Drumcree Compromise
NHS Leaders Back Early Design of Proposed National Care Service
More Than One-Third of Regional UK Universities Face Financial Deficits
UK Current Account Deficit Narrows as Cross-Border Financial Flows Remain Strong
Bank of England and FCA Issue New Rules for Stablecoins and Digital Assets
MI5 Warns UK Universities Over Research Links With Chinese Institutions
UK Energy Price Cap Rises 4% as Electricity VAT Is Temporarily Suspended
Equity Calls for UK Personality Rights to Protect Performers From AI Replication
OpenAI Pauses Advanced Model Training Following Safety Concerns
Scottish Government Proposes Replacing 32 Councils With Larger Regional Authorities
Ofgem Raises UK Household Energy Price Cap by 4% From October
UK Counter-Terrorism Police Continue Investigation After Five Arrests Near RAF Fairford
OECD Cuts UK 2027 Growth Forecast to 1%
Labour Says State Pension Triple Lock Remains Protected Through Current Parliament
Andy Burnham Pledges National Care Service With Free Social Care in England
Six Flags Permanently Shuts Landmark X2 Roller Coaster Following Safety Scandals
Metropolitan Police Rule Out Terrorism in Golders Green Stabbing Investigation
Lithium-Ion Battery Identified as Cause of Fatal Merseyside House Fire
UK Department Rejects New Sea Use Framework Due to Stakeholder Fatigue
Major Thames Water Pipe Burst Causes School Closures in London
×