The Chancellor will tell City traders that “lessons have been learned” from previous failures which led to taxpayers bailing out some of the biggest names in British banking.

He is expected to endorse a major recommendation from last year’s Parliamentary Commission on Banking Standards, which called for a reserve power to “electrify the ring-fence” if banks did not implement reforms.

The Independent Commission on Banking, led by Sir John Vickers in 2011, had concluded that ring-fencing was the best way to protect “core” retail banking activities, such as their High Street operations, from any future investment banking losses.

Osborne’s speech comes on the same day the government introduces its Banking Reform Bill in Parliament.

Osborne is expected to say: “When the crisis hit, the fire was then so great that the whole economy was sacrificed to put it out. The British people need to know that lessons have been learnt. And they have.”