Distracting Background UI Elements on Macbook screen when designated as second screen

Mac OS (all latest builds as of time of writing), Macbook Pro M2Max, working with external display.

If you use the external display as primary and enable Loupe view for secondary display (which in this case will be the laptop's screen)  it shows a band of desktop wallpaper on top of display which is extremely distracting. Please see screenshot attached. 

Needs fixing, especially for modern macbook pro displays with notch.