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FirstFT: Kwarteng looks to scrap bankers’ bonus cap

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Good morning. Kwasi Kwarteng is seeking to scrap Britain’s cap on bankers’ bonuses, introduced after the 2008 financial crash, in a controversial move to boost the City of London’s global competitiveness.

The chancellor argues that removing the bonus limit will make London a more attractive destination for top global talent and would be a clear signal of his “Big Bang 2.0” approach to post-Brexit City regulation, according to colleagues.

Boris Johnson shied away from lifting the cap, fearing a political backlash, but Kwarteng told City executives last week: “We need to be decisive and do things differently.”

Although no final decisions have been taken, people close to the chancellor’s thinking said he wanted to end the cap, introduced by EU legislation in 2014, as part of a package of City reforms.

The UK has long opposed the EU bonus cap, which limits year-end payouts to twice a banker’s salary. For example, if a bank wanted to pay someone £3mn in London, it would need to pay that person a salary of at least £1mn.

Thanks for reading FirstFT Europe/Africa. Send your feedback on the newsletter to [email protected] — Jennifer

1. US shale bosses tell Europe: ‘There’s no bailout coming’ The industry has warned that it cannot rescue Europe with increased oil and gas supplies this winter amid fears that reduced Russian exports will drive crude prices back above $100 a barrel. The EU is planning to raise €140bn from windfall taxes on energy companies’ profits to soften the blow of record prices.

More on the war: Volodymyr Zelenskyy, Ukraine’s president, was involved in a car accident on returning to Kyiv from the eastern Kharkiv region, which was recently reclaimed from Russian forces. He sustained no serious injuries.

2. London hospitality venues urged to stay open for Queen’s funeral The UK capital’s authorities are advising businesses to be “ready to open their doors” to serve crowds during Queen Elizabeth’s funeral on Monday after companies raised concerns about a backlash against planned closures.

Thank you to everyone who took part in yesterday’s poll. Sixty-four per cent of respondents said they did not want King Charles III to speak up on political issues, while twenty-seven per cent of respondents said they did.

3. Governments and WHO acted too slowly on Covid: report Failures in prevention, basic public health practice and international solidarity resulted in 17.7mn deaths, including those not officially counted, the Lancet Commission said yesterday after a two-year study of the coronavirus pandemic that concluded the WHO “acted too cautiously and too slowly”.

4. Axel Springer boss used Bild to campaign against Adidas Chief executive Mathias Döpfner used his best-selling tabloid to campaign against Adidas’s decision to stop paying rent during the pandemic, publishing more than 20 articles chiding the sportswear retailer for a planned rent freeze without disclosing that he was its landlord in Berlin.

5. Citi opens Málaga hub for junior bankers Citigroup has opened a hub for junior investment bankers in the beachside Spanish city. The US bank insisted the two-year programme was more than a gimmick as Wall Street lenders battle for talent amid criticism of burnout.

The day ahead

Shanghai Cooperation Organisation forum The meeting begins in Samarkand, Uzbekistan. Chinese president Xi Jinping is attending alongside his Russian counterpart Vladimir Putin, India’s prime minister Narendra Modi, Iran’s president Ebrahim Raisi and Pakistan’s prime minister Shehbaz Sharif.

Northern Ireland Protocol deadline It is the last day for Downing Street to submit a formal response to seven legal actions launched by the EU against Britain over breaches of the Northern Ireland protocol, as grace periods allowing lighter touch trade controls are due to expire. (Guardian, FT)

Norway’s PM meets gas companies Jonas Gahr Støre has said he wants to “discuss longer contracts that can maybe contribute to stabilising prices”, after previously stating that he was “sceptical” about a gas price cap to solve energy shortages in Europe.

Economic data The EU releases July trade balance figures after costly energy imports pushed the eurozone into a trade deficit in June. France’s August consumer price index is forecast to have fallen on a slowdown in energy price rises. The US has retail sales data for the same month, which are expected to reflect resilient consumer spending, and industrial production figures. (Reuters, WSJ)

Corporate earnings John Lewis’s half-year results will be a test of the UK’s largest-employee owned company’s “moments economy” in an increasingly bleak economic reality. Adobe Systems and Kier also report earnings, while Trainline has a first-half trading update.

What else we’re reading

Defiance in the rabbit warren of Kyiv’s presidential palace Last week, Gillian Tett took a trip down the darkened corridors of the Ukrainian presidential palace, where despite fighting off a brutal Russian invasion for seven months, President Volodymyr Zelenskyy’s team was intent on delivering the message of business as usual.

A montage including Ukrainian president Volodymyr Zelenskyy
Kyiv intends to bolster citizens’ morale, prop up the shattered economy and encourage foreign investment if, or when, the war ends © Klawer Rzeczy

The left needs to rediscover its fervour for free speech Since the death of the Queen, some British institutions have been clamping down on free speech, including disturbing arrests of anti-monarchy protesters by police. Jemima Kelly argues that expressing ideas without being censored is a vital component of a functioning democracy.

Italians at boiling point over how to cook pasta with less gas Can you cook pasta with the gas turned off? As fuel bills surge, Rome’s advice to citizens to save energy with “virtuous actions” — including turning down the heat under saucepans — has prompted a culinary debate, Amy Kazmin writes.

Try our personal inflation calculator This year, major economies have reached first double-digit inflation for the first time since the 1980s. Inflation affects us all, but the rate at which we experience it also depends on our unique spending habits. Use our calculator to estimate your personal inflation rate.

How to be a good citizen of the internet In the early 2000s, if you wanted a presence on the web, you had to build it, either by writing HTML code or using primitive services such as Yahoo’s GeoCities. Now, what used to require months, even years, of training can be recreated by most semi digitally literate people. The “no-code” movement allows users to build powerful websites or apps without writing any code, as Dave Lee explains.

Books

In his latest novel Fairy Tale, Stephen King brings a new twist to age-old grotesquerie. The master of horror embellishes a familiar mystical realm with profanity and gore.

Disrupted Times — Documenting the changes in business and the economy between Covid and conflict. Sign up here

Asset Management — Sign up here for the inside story of the movers and shakers behind a multitrillion-dollar industry

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