October 4, 2022
Quasi Quarteng’s mini budget gives the City of London ‘a big smile’

Quasi Quarteng said on Friday that eliminating the cap on bankers’ bonuses would “reaffirm the UK’s position as the world’s financial services centre”, as he introduced sweeping rule changes in a mini-budget aimed at turbocharging investments in the UK. Did it

In one of the most supportive of the London policy package for decades, the chancellor vowed to break the EU’s overburdened rules, saying he had withdrew investment because the new government would draw an immediate “Brexit dividend” from its reforms. Had asked

Confirming the end of the bankers’ bonus limit, Quarteng said: “We need global banks to create jobs here, invest here and pay taxes here in London, not in Paris, nor in Frankfurt. , nor in New York.

“All of the bonus caps were for raising bankers’ basic pay, or driving activity outside Europe,” he said.

Relations between the Conservative Party and business have been strained in recent years. In response to corporate concerns over Brexit, he hit a low point when Boris Johnson called it “nonsense business” in 2018.

But current and former city officials in particular welcomed Quarteng’s plans as a turning point in the government’s approach to financial services.

Rupert Lee-Brown, chief executive of forex group Caxton, said that “along with attractive tax cuts, removal of bonus caps, regulatory reform and massive spending plans, these measures will bring a big smile to the city’s face”.

Miles Selick, chief executive of lobby group TheCityUK, said the plans made clear that Prime Minister Liz Truss was “fully committed to the UK being competitive on tax” and “would be highly welcomed by businesses and investors”.

He said they would “send a message to the rest of the world that the UK is an attractive place to do business”.

Former HSBC chairman Sir Douglas Flint said that although eliminating the bonus cap “would not affect the amount of salary” bankers would receive, the sector’s “fixed costs would be lower because there would be no increase in basic wages”.

Flint said the change would “level the playing field with New York” and help US banks more easily move employees from the US to London, where performance-related payments are unlimited.

The European Union put a cap on bonuses in 2014, limiting them to 100 percent of the salary, or 200 percent with shareholder approval.

Quarteng said Solvency II, a set of rules governing the insurance sector, will be overhauled to free up more of the £4tn investment held by insurers and pension funds to support domestic infrastructure projects and promising businesses .

Quarteng said he would introduce draft rules to reform pension regulatory fee caps, enabling defined contribution pension schemes to invest in the UK’s most innovative businesses and productive assets.

Up to £500mn has been pledged to support a fund designed to catalyze investment from pension schemes and other investors in UK science and technology businesses.

Quarteng also said that a set change in the rate of the bank corporation tax surcharge would be abolished. From April 2023, banks and building societies will continue to pay an additional rate of 8% on their profits, not less than the rate of 3 per cent, making the combined rate 27 per cent.

However, some officials acknowledged that the measures jeopardized economic stability, with concerns about how sterling would react to deeper tax cuts and the rising national debt.

Caxton’s Lee-Brown said the plan was “not without its risks”, adding that “the cost to the country would push the economy backwards if it all goes wrong”.

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