Liz Truss is turbocharging bankers’ bonuses. What a gift for Labour | Larry Elliott

Champagne will be uncorked in Canary Wharf - and along with it, a clear them-and-us narrative

The timing is, to say the least, curious. Britain is facing its biggest cost of living crisis in decades. Workers are angry about crashing living standards. And yet one of the first things on the new government's agenda is to scrap the cap on bankers' bonuses. Kwasi Kwarteng may announce the decision as part of his mini-budget next Friday.

Make no mistake, there is an argument for what the chancellor is planning, namely that the cap hasn't worked. Critics said when the EU brought in its legislation in 2014 that banks would find a way round the cap by simply paying higher salaries, and they have been proved right. Placing limits on one part of a package (the bonus) but imposing no constraints on the other part (basic pay) never made any sense. If the idea was that bankers needed to be paid less, it would have been more logical to go the whole hog and impose a cap on total remuneration.

Larry Elliott is the Guardian's economics editor