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Kwasi Kwarteng, the new Chancellor of the Exchequer, wants to raise the bonus limit for bankers in the UK. This should make London even more attractive as a financial centre.
This was reported by the Financial Times. Bonus caps became mandatory from the EU in 2014, but the UK no longer has to comply with them due to Brexit. Current rules mean that bankers can receive a maximum of twice their annual salary as a bonus.
Recently resigned Prime Minister Boris Johnson is also said to have considered lifting restrictions on several occasions, but said the move was too politically risky, according to insiders. Even now there is a lot of criticism of the possibility of cancellation. Sir Keir Starmer, leader of the Labor Party, described it as “a pay rise for bankers, a pay cut for district nurses”. The cancellations are even seen by some conservatives as a wrong move at a time when many people are forced to cut spending because of high inflation.
According to the Financial Times, US investment banks are especially bothered by bonus restrictions, as they employ tens of thousands of employees in London. In America, low wages and high performance bonuses are the norm, which, according to the bank, often lead the best people to find their way onto Wall Street. In addition, banks complain that it is more difficult to reduce wage costs in difficult times than to eliminate bonuses.
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