Making his mini-budget announcement in the House of Commons, the chancellor said the UK economy was dependent on a “strong financial services sector”.
He confirmed that the UK government will do away with rules that limit bankers’ bonuses.
The cap was introduced in the European Union in 2014 following the global financial crisis.
It limits the amount that can be paid to a banker in bonus, unless the shareholders agree, to double it from their annual salary.
— HM Treasury (@hmtreasury) September 23, 2022
As Mr Quarteng announced he was lifting the cap besieged by Labor MPs, he received cheers from his own backbenchers.
Speaking to the Commons, the new chancellor said: “A strong UK economy has always depended on a strong financial services sector.
“We need global banks to create jobs here, invest in London and pay taxes in London, not Paris, not Frankfurt, not New York.
“All the bonus caps were to raise the basic pay of bankers, or to carry out activity outside Europe.
“It never limited total remuneration, so let’s not sit here and pretend otherwise. So we’re going to get rid of that.
“And to reaffirm the UK’s status as the financial services hub of the world, I will roll out an ambitious package of regulatory reforms later in the autumn.”
Critics of the cap said it made the UK a less attractive option for the financial sector and pushed businesses to the US or Asia.
While proponents of the limit warn uncapped bonuses lead bankers to take excessive risk, linking them to the 2008 financial crisis.