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Scottish fund managers and U.S. bankers flock to London as quarten swells the city

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Meanwhile, tax disparities have caused surprise in Scotland about their impact on Edinburgh, a major financial center north of the border.

Scottish banker and former business adviser to Nicola Sturgeon, Benny Higgins, said:

“The impact on high-income earners represents a peril for the Scottish business community. The Scottish government does not need to close the gap entirely, but it does need to do something to reduce it.”

Columbia Threadneedle fund manager Peter Hewitt, who lives in Edinburgh, said:

“Berwick-on-Tweed in England is 45 minutes by train. It’s like commuting from Sevenoaks to London. This will cause problems for employers.”

Another Scottish fund manager said he had discussed the implications with his wife, adding: Lifestyles here in Edinburgh may be getting better, but money in your pocket matters too, and the divide is widening. If there is no response from Nicola Sturgeon, it’s a signal that it’s okay for you to move. “

The bonus cap also sparked immediate interest in the US. Bankers currently working in London are unlikely to experience a significant change in their salary packets, but investment banks hope to move more staff to the UK after bonus caps are lifted.

As one American banker put it:

“Everyone is happy that the government is thinking about financial services again, something that previous post-Brexit administrations were completely lacking.”

The Brussels cap forced banks to push up executive salaries to make up for the lack of bonuses, effectively locking in large additional costs for institutions and reducing their ability to cut salaries during an economic downturn. .

It also limited lenders’ leeway to cancel or collect compensation from poorly performing or misbehaving individuals. This is the main advantage of the bonus system and the reason why the Bank of England has long opposed caps.

Another financial insider said removing the cap would encourage American banks to send staff from their New York offices to the UK.

They said: Performance-related improvements help you better manage your fixed costs. “

Industry groups also welcomed the move.

The City UK CEO Miles Selick said the changes show the UK is open to doing business.

He said: “With bonus caps and taxes [policy] More generally, sending the message that the UK is open and ambitious for business.

“The bonus cap was a policy that I felt had not achieved much that previous governments were aiming for. A clawback provision is a more effective way to do this.”

This supportive tone contrasts with how some economists interpret Mr Kwarteng’s £45bn tax cut plan.

The pound plunged after his announcement on Friday. On Saturday, economist Nouriel Roubini, nicknamed ‘Dr. rice field.