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The cap on bankers’ bonuses is to be abolished, financial regulators have announced.

From Tuesday 31 October, EU rules that limit bonus payments to twice a banker’s salary will be removed in the UK, the Bank of England’s Prudential Regulatory Authority (PRA) said.

The policy change was initially announced by former chancellor Kwasi Kwarteng in the infamous September 2022 mini-budget of the Liz Truss premiership.

It was one of the few announcements to be retained when Chancellor Jeremy Hunt took charge of the Treasury.

City executives had complained that the cap was a barrier to recruiting and retaining quality workers, and London was losing out on talented staff as a result.

The head of the London Stock Exchange had in May called for company bosses to be paid more.

“The alternative is we continue standing idly by as our biggest exports become skills, talent, tax revenue and the companies that generate it,” Julia Hoggett said.

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From next week, there will be no legislative barriers on bonus payments for employees of banks, building societies and major investment firms that are regulated by the PRA.

The move is being made to deal with what the PRA and Financial Conduct Authority (FCA) said are “unintended consequences” of the cap, namely that salaries have been increased as a workaround.

Having high fixed yearly payments, rather than variable bonus sums, makes it harder for firms to adjust to times when financial performance is poor or to react to potential misconduct by a senior executive, a statement by the bodies said.

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The announcement follows a period of consultation conducted by the PRA and will apply to the current and future financial years.

The cap was imposed in 2014 in the wake of the 2008 global financial crash. It was associated with incentivising bankers to take outsized risks, which the EU sought to discourage.

Not everyone has welcomed the removal of the cap.

“This is an obscene decision,” the Trades Union Congress (TUC) said.

“City financiers are already enjoying bumper bonuses. They don’t need another helping hand from the Conservatives,” TUC secretary general Paul Nowak said.

“At a time when millions up and down the country are struggling to make ends meet – this is an insult to working people.”

A spokesperson for the Treasury said: “Decisions on remuneration in the banking sector are for the PRA as the independent statutory regulator.”

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ECB adviser doubts digital euro can match US dollar stablecoins

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ECB adviser doubts digital euro can match US dollar stablecoins

ECB adviser doubts digital euro can match US dollar stablecoins

The European Central Bank may rely on regulated euro stablecoins and private innovation to counter the dominance of US dollar stablecoins, says adviser Jürgen Schaaf.

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Democrats probe housing regulator over considering crypto in mortgages

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Democrats probe housing regulator over considering crypto in mortgages

Democrats probe housing regulator over considering crypto in mortgages

A group of Senate Democrats has probed Federal Housing Finance Agency director William Pulte over his order to propose how to consider crypto in mortgage applications.

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Sir Keir Starmer set for Donald Trump trade talks as PM walks diplomatic line between EU allies and US on Gaza

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Sir Keir Starmer set for Donald Trump trade talks as PM walks diplomatic line between EU allies and US on Gaza

Gaza and transatlantic trade are set to dominate talks between Donald Trump and Sir Keir Starmer when the pair meet in Scotland on Monday.

Downing Street said the prime minister would discuss “what more can be done to secure the ceasefire [in the Middle East] urgently”, during the meeting at the president’s Turnberry golf course in Ayrshire.

Talks in Qatar over a ceasefire ended on Thursday after the US and Israel withdrew their negotiating teams.

Mr Trump blamed Hamas for the collapse of negotiations as he left the US for Scotland, saying the militant group “didn’t want to make a deal… they want to die”.

Sir Keir has tried to forge close personal ties with the president, frequently praising his actions on the world stage despite clear foreign policy differences between the US and UK.

The approach seemed to pay off in May when Mr Trump announced the agreement of a trade deal with the UK that would see several tariffs lowered.

The two leaders are expected to discuss this agreement when they meet, with the prime minister likely to press the president for a lowering of outstanding tariffs on imports such as steel.

Prior to the visit, the White House said the talks would allow them to “refine the historic US-UK trade deal”.

Extracting promises from the president on the Middle East may be harder though.

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Despite some reports that Mr Trump is growing frustrated with Israel, there is a clear difference in tone between the US and its Western allies.

As he did over the Ukraine war, Sir Keir will have to walk a diplomatic line between the UK’s European allies and the White House.

On Thursday, French President Emmanuel Macron announced his country would formally recognise a Palestinian state in September, the first member of the G7 to do so.

That move was dismissed by Mr Trump, who said it “doesn’t carry any weight”.

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The UK, French and German leaders spoke over the weekend and agreed to work together on the “next phase” in Gaza that would see transitional governance and security arrangements put in place, alongside the large-scale delivery of aid.

Under pressure from members of his own party and cabinet to follow France and signal formal recognition of Palestine, Sir Keir has gradually become more critical of Israel in recent months.

On Friday, the prime minister said “the starvation and denial of humanitarian aid to the Palestinian people, the increasing violence from extremist settler groups, and Israel’s disproportionate military escalation in Gaza are all indefensible”.

Government sources say UK recognition is a matter of “when, not if”, however, it’s thought Downing Street wants to ensure any announcement is made at a time when it can have the greatest diplomatic impact.

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Cabinet ministers will be convened in the coming days, during the summer recess, to discuss the situation in Gaza.

The UK has also been working with Jordan to air drop supplies, after Israel said it would allow foreign countries to provide aid to the territory.

President Trump’s trip to Scotland comes ahead of his second state visit to the UK in September.

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Downing Street says Ukraine will also likely be discussed in the meeting with both men reflecting on what can be done to force Russia back to the negotiating table.

After the meeting at Turnberry, the prime minister will travel with the president to Aberdeen for a private engagement.

Mr Trump is also expected to meet Scottish First Minister John Swinney while in the country.

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