Brown calls for changes to banker pay

A more sustainable bonus system should be put in place at banks going forward, Gordon Brown has said.

In a wide-ranging new interview with the Financial Times, the prime minister also said that financial firms could be forced to hold more cash on their balance sheets in order to better protect themselves against future credit crunches.

Bankers have been accused by some industry analysts of helping to worsen the current crisis due to their pursuit of annual bonuses.

This is said to have led to an emphasis on generating short-term profits for banks, at the expense of longer-term stability.

Mr Brown said that bonuses should be based on generating longer-term success.

He added that financial firms should also be given the right to ’claw back’ previous bonuses in certain cases - and also signalled that he was upbeat on the UK’s economic prospects.

’There’s definitely been an improvement since April against what people forecast … I would say that we are cautious but we’re cautiously optimistic about the future,’ he said.

Forecasts from the government suggest that UK GDP will shrink by around 3.5 per cent over 2009. ADNFCR-2318-ID-19340184-ADNFCR