Financial firms need to agree to restrain banker bonuses, while politicians should give banker-bashing a rest and instead work to create a banking system that will drive economic prosperity, the head of the UK's leading business lobbying group said.

Richard Lambert, director-general of the Confederation of British Industry, cautioned that if banks award large bonuses, it would be "toxic in the extreme" amid job losses and pay cuts in the broader economy. "This exceptional combination of circumstances will require exceptionally sensitive handling, preferably with the major global institutions acting collectively when it comes to compensation matters, and resisting the temptation to poach disaffected mega stars," he said.