In a significant move as part of a post-Brexit shake-up of UK financial rules, it has been confirmed that the cap on bankers’ bonuses will be removed from October 31. This plan, initially announced by former Chancellor Kwasi Kwarteng last year, aimed at making London a more appealing destination for business. Surprisingly, it remains one of the few mini-budget policies retained after most were unwound by Mr. Kwarteng’s successor.
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The cap on bonuses, introduced in 2014 during the UK’s EU membership, was designed to curb excessive risk-taking in the financial sector following the 2008 financial crash. The cap limited the variable pay of employees in financial institutions, leading finance bosses to complain about higher base pay that escalates fixed costs. Critics argue that removing the cap could heighten financial risks and favor the wealthy during a period of widespread household struggles with the cost of living.
