UK to fight French in bonus row
EUROPEAN Union finance ministers yesterday agreed to work together to regulate bankers’ pay – but the UK is set to fight plans to cap bonuses.
In the run up to the G20 meetings, France and Germany have been drumming up support for the idea of bonus caps, including a targeted tax and a legal maximum share of profits.
But Prime Minister Gordon Brown remains unconvinced those rules could be enforced, fearing it would only prompt bankers to migrate to foreign financial centres.
“The bonus cap idea sounds good politically, but we need something that actually works,” a Treasury source told Morning Wire yesterday.
“We’re chairing the meeting and obviously we’ll hear out any proposals, but it’s very difficult to regulate pay in any sector of the economy.”
“If shareholders, for example, don’t want lower pay for executives, they’ll find a way around it.”
The US government is also unlikely to want to lock horns over bonuses with Wall Street as it fights an uphill battle to pass healthcare reforms. The Obama administration has already refused proposals to tax bonuses paid by government-supported banks.