London Daily

Focus on the big picture.
Tuesday, Jun 16, 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 Supreme Court Revises Legal Definition of Deprivation of Liberty
King’s Birthday Honours Recognise Contributions Across Science, Culture and Public Service
UK Ministry of Defence Reports Interdiction of Russian Shadow Fleet Vessel
UK and US Launch Joint Regulatory Programme for Medicines and Healthcare Products
Solicitor General Refers Murder Sentence to Court of Appeal Under Unduly Lenient Scheme
UK Launches £1.6 Million Mobile Museum Initiative to Expand Cultural Access
Judicial Pay Structure Undergoes Government Review Following Senior Recommendations
Government Confirms Nearly 180 New Youth Hubs Across the United Kingdom
UK Government Expands Careers Support Through Partnership with LinkedIn
Digital News Report Highlights Growing Global Concern Over AI and Information Overload
UK Chancellor Reaffirms Fiscal Discipline and Borrowing Reduction Strategy
UK Government Invests £219 Million in Sustainable Aviation Fuel Development
Rolls-Royce Small Modular Reactors Secures Major Swedish Export Contract
Government Confirms Locations for Nearly 180 Youth Hubs Across Great Britain
UK Government Partners with LinkedIn to Expand Employment Support Services
Reuters Institute Report Flags Rising Public Anxiety Over News and Information Overload
UK Government Commits £219 Million to Expand Sustainable Aviation Fuel Industry
Chancellor Convenes Market Engagement Group to Assess UK Economic Outlook and Productivity Risks
Rolls-Royce Wins Multibillion-Pound Swedish Contract for Small Modular Nuclear Reactors
Government to Ban Social Media Access for Under-Sixteens Across the United Kingdom
Government Approves Fast-Tracked Broadcast Merger Reshaping UK's Media Landscape
Resignation of Defence Secretary John Healey Triggers Debate Over UK Military Strategy
Britain Intensifies Diplomatic Efforts to Support US-Iran Ceasefire
Bank of England Faces Tough Interest Rate Choices After Economic Contraction
Belfast Sees Second Day of Anti-Migrant Riots as Police Deploy Water Cannons
UK Economy Shrinks in April as Energy Price Shocks Weigh on Growth
UK to Ban Social Media Access for Children Under 16 From 2027
UK Parliament Opens Week of Fast-Tracked Security and Infrastructure Legislation
Northern Ireland Projects £21 Million Boost From Major Cultural and Sporting Events
UK and Japan Sign Technology Security Pact to Strengthen AI and Supply Chain Cooperation
UK Welcomes US-Iran Peace Breakthrough Aimed at Restoring Strait of Hormuz Shipping
British Forces Intercept Russian Shadow Fleet Oil Tanker in English Channel Sanctions Operation
UK to Ban Social Media for Under-16s Under Landmark Online Safety Expansion
Anti-Immigrant Riots Spread Across Belfast, Raising Security Concerns
Ministry of Defence Opens Europe's Largest Drone Testing Facility in Swindon
Kemi Badenoch Calls for Deregulation to Restore City's Global Competitiveness
UK Housing Market Posts Sharpest June Price Decline in Fourteen Years
NHS Waiting Lists Rise to 7.22 Million as Diagnostic Delays Reach New Highs
Makerfield By-Election Raises Prospect of Labour Leadership Challenge
Bank of England Expected to Hold Interest Rates at 3.75% Despite Growing Policy Divisions
Royal Marines Seize Sanctioned Russian Oil Tanker in English Channel
Prime Minister Keir Starmer Set to Ban Social Media and AI Chatbots for Under-16s
United Kingdom Markets Rally After US-Iran Deal Reopens Strait of Hormuz
Defence Secretary John Healey Resigns Over Military Spending Dispute, Triggering Cabinet Crisis
Royal Navy Takes Part in Trooping the Colour for the First Time in 350 Years
Think Tank Warns Labour's European Union Reset Could Carry Significant Economic Costs
UK Semiconductor Centre and Japan's Rapidus Forge Advanced Chip Manufacturing Partnership
UK and Japan Launch Offshore Wind Compact Backed by £9 Billion in Investment
Starmer and Trump Discuss Iran Peace Efforts and Reopening of the Strait of Hormuz
United Kingdom and Japan Sign £18 Billion Investment Partnership Focused on Clean Energy and Advanced Technology
×