Speculation is mounting that the government will announce a windfall tax on bankers’ bonuses in Wednesday’s Pre-Budget Report.

On Sunday, Alistair Darling told the BBC: “We are not going to be held to ransom by people who believe you can pay extraordinarily high bonuses without regard to what’s going on.”

However, Philip Seager, a director of Alan Mitchell Financial Recruitment, warned that any attempt to impose punitive taxes on bankers would be damaging both to the banking sector and to recruiters.

“It’s going to make it even more difficult to attract talented bankers as they are increasingly going to be looking at moving to other jurisdiction, that are not so punitive.”  The Gulf States are particularly attractive because of their low tax regimes, he adds.

“It’s going to put people off going into banking,” he says. “Banking is a tough job; they work long hours and are well rewarded for it. If bonuses are going to stop then fewer people will want to go into banking. This will make it harder to recruit for banks and fewer jobs, which will definitely have an unfavorable impact on recruitment. I can see nothing positive in this for recruiters. 

“It’s political grandstanding in an election year,” he adds.