Excessive pay for top bosses is holding back economic growth in Britain, the chief economist of the Bank of England, Andy Haldane, has warned, in a significant intervention in the debate about executive remuneration in the UK’s biggest companies.

Mr Haldane, who has earned a reputation as one of the central bank’s most radical minds, highlighted in a speech in Westminster the fact that FTSE 100 bosses are now paid 150 times the average UK worker.

This large and growing remuneration gap, Mr Haldane said, “drive[s] a wedge between management and employees…that in turn erodes social capital. A company, like a country, whose physical and social capital is being eroded is one whose wealth-creation capacity is being impaired.”

The intervention from a senior central banker on the vexed issue of remuneration levels for top bosses is likely to embolden reform-minded shareholder and asset management groups as they struggle to rein in executive pay at the country’s largest companies in what has been described as a new “shareholder spring”.

So far in 2016 there have been major pay revolts by shareholders at the oil giant BP, the mining group Anglo-American and the engineering company Weir, all over the level and structure of proposed remuneration packages to chief executives. A focal point of protest next month is expected to be the annual general meeting of the advertising conglomerate WPP where the annual pay of its chief executive and founder Sir Martin Sorrell is expected to soar to £70m.

Social capital refers to trust and relationships in a society and Mr Haldane argued this matters “every bit as much to wealth and well-being” as financial capital such as stocks and shares and other such assets.

“This is a telling intervention by one of the country's most highly regarded economists” said Stefan Stern of the High Pay Centre. “The damaging effect excessive pay at the top has on both businesses and the wider economy is increasingly being called out, and not before time”.

Mr Haldane, in a speech to the annual dinner of the reformist New City Agenda think tank, suggested the damage done to social capital by the bad behaviour of banks in the run-up up to the financial crisis was one of the reasons the economy’s recovery has been so disappointing by historical standards. “A lack of trust in finance potentially hobbles both economic growth and financial stability” he said. “Unaddressed, that jeopardises future wealth and well-being”.

Mr Haldane added that as well as loosening the social glue that enables the economy to run efficiently, high pay was likely to be hindering growth in a more direct way by crowding out investment by companies. “Monies paid out to executives are monies not being re-invested in the company, reducing investment in physical and human capital” he said.

But Mr Haldane, who is paid £215,627 a year by the Bank of England, was sceptical about the ability of shareholder groups, alone, to rein in top pay since their votes were often non-binding on managements. “With very few exceptions, no differences were made to executive compensation packages as a result of investor action” he said, referring to pay insurrections in recent years.

Instead, he suggested politicians should consider reforming the 2006 Companies Act, and requiring managements to place more weight on the interests of employees and customers alongside shareholders. “The shareholder-centric model may have become a recipe for depleting long-term company wealth-creation and, thus, societal well-being” he said.

Business news: In pictures Show all 13 1 /13 Business news: In pictures Business news: In pictures Flybe collapses Airline Flybe has collapsed. All future flights on the Exeter-based airline have been cancelled – leaving more than 2,300 staff facing an uncertain future, and wrecking the travel plans of hundreds of thousands of passengers. The chief executive, Mark Anderson, said: “Europe’s largest independent regional airline has been unable to overcome significant funding challenges to its business. AFP via Getty Business news: In pictures Future product placement will be 'tailored to individual viewers' Marketing executives say that product placement in films and televison shows on streaming services such as Netflix may be tailored to individuals in future. For instance, if data shows that a viewer is a fan of pepsi, a billboard in the background of a shot would host an advert for pepsi, while for a viewer known to have different tastes it could be for Coca-Cola Paramount Business news: In pictures Corbyn wishes Amazon a happy birthday In a card sent to Amazon CEO Jeff Bezos on the company's 25th birthday, Labour leader Jeremy Corbyn writes: "You owe the British people millions in taxes that pay for the public services that we all rely on. Please pay your fair share" Business news: In pictures No deal, no tariffs The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers Getty Business news: In pictures Fingerprint payment NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user's fingerprint NatWest/PA Wire Business news: In pictures Mahabis bust High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019 Mahabis Business news: In pictures Costa Cola Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant PA Business news: In pictures RIP Payday Loans A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain's biggest, went into administration on August 30 PA Business news: In pictures Musk irks investors and directors Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks Getty Business news: In pictures Jaguar warning Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a "bad" Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks AFP/Getty Business news: In pictures Spotif-IPO Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn't issuing shares, but rather, shares held by Spotify's private investors will be sold AFP/Getty Business news: In pictures French blue passports The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July. The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process. Business news: In pictures Beast from the east economic impact The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.

Mr Haldane has raised concerns about the economically damaging effects of “short-termist” behaviour of private firms before. Last year he warned that firms seemed to be under-investing and paying excessive amounts of cash out to shareholders in the form of dividends. In 2012 he said the “Occupy” movement had been “right” in its diagnosis of the problems of the global financial system.

In another potentially significant intervention, Mr Haldane suggested that the Bank of England may need to “rethink” its current plans to require the banks to fund their balance sheets with more equity. Experts, including the former head of the Government’s Independent Banking Commission Sir John Vickers, have accused the Bank of undercooking its capital requirements on big UK lenders and thus potentially imperilling future financial stability.

“Academic challenge, challenge which causes policymakers to think, and possibly rethink, their calibration of prudential standards, is an essential ingredient of a healthy financial and regulatory system” he said. “The academic debate about prudential standards for banks is not closed; it has only just opened. And one of the Bank’s public policy responsibilities is to help nurture that policy challenge.”