THE cap on bonuses for city fat cats has been AXED by Kwasi Kwarteng in today’s mini budget bonanza.
Speaking in the Commons, the Chancellor claimed that scrapping the cap will turbocharge growth in the British economy.
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A limit on bankers’ bonuses was introduced by the EU in the aftermath of the 2007-2008 financial crash.
Currently, fat cats can only earn less than 200 per cent of their salary as an added goodie, but now the sky’s the limit.
The government thinks that axing the cap will speed up growth by luring firms to London rather than rivals New York, Frankfurt and Paris.
Supporters also say that bonuses were taxable, so now more cash can be generated for the Treasury to spend on vulnerable Brits.
In his mini budget speech, Mr Kwarteng said: “A strong UK economy has always depended on a strong financial services sector. We need global banks to create jobs here, invest here, and pay taxes here.
“All the bonus cap did was to push up the basic salaries of bankers, or drive activity outside Europe. It never capped total remuneration, so let’s not sit here and pretend otherwise.
“So we’re going to get rid of it.”
Critics of scrapping the bonus cap scrap say it’s a disgrace that the government is giving bankers a pay day while hard-up Brits struggle with their bills.
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Labour MP Dame Margaret Hodge said it is “obscene” to be thinking about it in the raging cost of living crisis.
Pat McFadden MP, Labour’s Shadow Chief Secretary to the Treasury, raged: “On one hand the Tories encourage families to practice pay restraint, with the other they lift the cap on investment bankers’ bonuses.
“This is a bizarre move that will do nothing to support growth, and comes straight from the tired Tory playbook on trickle-down economics which haven’t worked for them over the last decade.
Axing the bankers’ bonus cap is just one part of the Chancellor’s “Big Bang 2.0” post-Brexit deregulation blitz.
The red tape bonfire also includes Brussels’ Solvency II rules that limit insurance firms’ investments in exchange for them pouring money into the cash-starved social care system.
