Chancellor of the Exchequer Alistair Darling has imposed a 50% levy on banker bonuses and said he will increase income taxes after elections next year.

The Treasury expects to raise 550 million pounds ($896 million) targeting payouts at banks in the next few months and another 3 billion pounds from incomes earned after April 2011. Borrowing will rise by 4.6 billion pounds to 611 billion pounds in the four years through March 2013.

Angela Knight, the British Bankers' Association's chief executive, said foreign banks that reward staff with contractually agreed bonuses will be "hardest hit" and may look at London as "a significantly less attractive place."

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