In the UK, Liz Truss's government is tackling a hot topic and wants to lift the cap on bankers' bonuses.

So far, as in the EU countries, the variable, performance-related payments are capped.

They may not exceed the base salary or, with the approval of the Bank's shareholders, a maximum of twice that amount.

Philip Pickert

Business correspondent based in London.

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Finance Minister Kwasi Kwarteng wants to remove the cap to make the London financial center more competitive.

The decision is part of planned "ambitious deregulation" measures, he said on Friday.

"We need global banks that create jobs here, invest here and pay taxes here in London, not in Paris, not in Frankfurt and not in New York," he said in parliament.

"Capping bonus payments only boosted bankers' base salaries or moved operations outside of Europe."

New Prime Minister Liz Truss and her Finance Minister are determined to lift the bonus cap after Brexit.

The government is aware that the step will not be popular with the population in the current tense economic situation.

Labor has already protested sharply.

The opposition party criticized that while nurses had to accept large drops in real wages due to high inflation, bankers received bigger bonuses.

A flash poll by YouGov found that just 15 percent of voters support ending the bonus cap, while 60 percent opposed it.

The bonus cap polarizes

The Times newspaper published an angry cartoon showing a squinting, smiling Chancellor of the Exchequer proclaiming that "in times of national distress and mourning" one section of the population needs "consolation and help" - and that's why he wants to increase the banker's bonus.

An editorial in The Times, however, defended the proposal as a sensible measure that would strengthen the City of London and the economy as a whole.

In the EU, the cap was introduced a few years after the financial crisis and came into effect in 2014.

At the time, proponents argued that excessive bonus incentives had contributed to bankers taking excessive risks and thus to the financial crisis.

In London, however, the bonus cap was already being fiercely opposed - by the banks as well as the government and the supervisors at the Bank of England.

Then-Federal Reserve Chairman Mark Carney called the cap "stupid" and even "a risk to financial stability."

What are the arguments of opponents of the lid?

Many say that the cap on bonuses has only caused bankers' base salaries to rise more sharply, making banks' overall cost structures more inflexible.

“The EU couldn't cap the absolute level of pay, so they capped the ratio of bonuses to fixed salary.

This has led to a significant increase in fixed costs in the banks," explained Alexandra Beidas from the commercial law firm Linklaters in the specialist magazine "The Banker".

She expects that if British banks were now given greater freedom in setting salaries and bonuses, they would link more pay to bankers' performance and, if they were not successful, reduce them or withdraw bonuses.

The Bank of England, which oversees financial stability, could also live with the bonus cap being removed.

A spokesman for the central bank said: The remuneration rules with delayed bonus payments, potential clawbacks and penalties for failure are "more effective instruments to ensure that bankers take appropriate account of the risks".

The EU financial sector is concerned about developments in Great Britain.

In the event of a post-Brexit deregulation push, the situation could shift in favor of the London financial center.

Hubertus Väth, Managing Director of the lobby organization Frankfurt Main Finance, said there was still some Brexit frustration in the City of London.

"The negative effects are far from over." However, lifting the bonus cap would be "a fast-acting therapeutic measure that may initiate the start of further measures".

The Frankfurt financial lobbyist believes that this alone would not fundamentally change the competitive situation.

"But the signal in London is unmistakable: 'Singapore-on-the-Thames' is back on the agenda," he says.

In fact, Truss, Kwarteng and other Brexit supporters have dreams that an unleashed financial economy like Singapore could boom.

Some are even talking about the “Big Bang 2.0” for the financial center London.

But others fear that excessive deregulation will increase the risk of new financial crises.