George Osborne has called on bankers to reign in bonuses ahead of Christmas.
The chancellor told MPs that banks would "do very, very well" to heed the advice of the financial policy committee which has urged them to show restraint during the Christmas bonus season.
"We're doing this with plenty of notice because they would be looking at giving out bonuses after the Christmas season", Osborne said.
The move comes after the Association of British Insurers (ABI), an influential investor group representing billions of pounds of assets, called for pay curbs for bank executives on Tuesday, saying that "it can no longer be business as usual for this remuneration round."
Appearing before the Treasury select committee, the chancellor also announced the date of the next budget, on 21 March 2012, and revealed that he would respond to the Vickers report on banking reform on 19 December.
Answering questions about last week's Autumn Statement Osborne said while there was "plenty" of evidence that the financial crisis had had "a bigger impact" than previously thought he had "not seen any evidence that there is a permanent forever damage to the British economy."
And he ruled out borrowing more to cut tax breaks, saying higher interest rates were "not worth" the risk.
But he refused to comment on speculation he would fund future tax cuts by further austerity measures, saying he would not announce his budget until 2012.
"Within the spending review totals, within the tax and spending totals we have set out, I have been perfectly prepared over the past couple of fiscal events to reduce some taxes or increase other taxes, to reduce spending or increase spending in different areas.
"What I am not prepared to do is borrow additional money in a discretionary way to fund a tax cut, because I simply think the risk you would be running with Britain's fiscal credibility at a time like this is not worth it."
The chancellor's comments come in the wake of the respected OECD think tank predicting the UK will fall back into recession next year.