Bankers' bonuses return as families struggle with bills

The bonus boys and girls look set to make a comeback in the City of London.

- JAMES MOORE

Morgan Stanley has become the latest US bank operating in the capital’s financial sector to take advantage of the UK’s post Brexit scrapping of the bankers’ bonus cap – one of the few things to survive the disastrous premiership of Liz Truss. Brought in by the EU after the financial crisis in 2008, the cap limited bonus payouts to no more than a banker’s basic salary, twice that with shareholder approval.

The stated aim of the policy was to reduce crazy risk-taking behaviour by bankers who earn their crust playing dice in the financial casino. This, it was said, would make banks safer. Unofficially, Europe’s politicians saw that the public’s appetite for a crackdown was very high, and this avowedly popular – but also populist – measure played directly into that.

The Cameron administration opposed it, as did the Bank of England. They argued that banks would inevitably respond by increasing bankers’ basic pay, which they would be powerless to cut if they needed flexibility during financial squalls. This argument did not wash with the public. People were largely under the impression that the measure would clip bankers’ wings. Understandably, it was felt this was no less than they deserved.