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| George Osborne takes on EU to battle for bankers' bonuses | George Osborne takes on EU to battle for bankers' bonuses |
| (25 days later) | |
| The Chancellor, George Osborne, goes to Brussels on Tuesday in what looks like a forlorn attempt to prevent the European Union from imposing swingeing curbs on bankers' bonuses in the City. | The Chancellor, George Osborne, goes to Brussels on Tuesday in what looks like a forlorn attempt to prevent the European Union from imposing swingeing curbs on bankers' bonuses in the City. |
| In a highly unusual defeat for the British financial services sector, illustrating the UK's deepening isolation in Europe and the reluctance of EU partners to do Britain any more favours, finance ministers of the other 26 are expected to endorse new legislation to slash "fat cat" bonuses. | In a highly unusual defeat for the British financial services sector, illustrating the UK's deepening isolation in Europe and the reluctance of EU partners to do Britain any more favours, finance ministers of the other 26 are expected to endorse new legislation to slash "fat cat" bonuses. |
| The decision to limit bonuses ordinarily to a year's salary was made last week at hard-fought negotiations between the European Parliament and officials from the 27 member states. Despite David Cameron's denunciation of the deal and Osborne's pledges to contest it, the decision appears irreversible. The UK is unable to wield a veto as Tuesday's decision can go to a qualified majority vote if necessary. | The decision to limit bonuses ordinarily to a year's salary was made last week at hard-fought negotiations between the European Parliament and officials from the 27 member states. Despite David Cameron's denunciation of the deal and Osborne's pledges to contest it, the decision appears irreversible. The UK is unable to wield a veto as Tuesday's decision can go to a qualified majority vote if necessary. |
| Britain has been unable to muster enough allies to block the proposal. Its likeliest supporters, Sweden, The Netherlands, and, most crucially, Germany have all come out in favour of capping bonuses. | Britain has been unable to muster enough allies to block the proposal. Its likeliest supporters, Sweden, The Netherlands, and, most crucially, Germany have all come out in favour of capping bonuses. |
| Anders Borg, the Swedish finance minister, said Stockholm was not on the British side on this, the Dutch are mulling even more restrictive caps on bankers' bonuses. Berlin also backs the caps, not least because Chancellor Angela Merkel faces re-election in September and the opposition social democrats are campaigning on what is a popular issue. | Anders Borg, the Swedish finance minister, said Stockholm was not on the British side on this, the Dutch are mulling even more restrictive caps on bankers' bonuses. Berlin also backs the caps, not least because Chancellor Angela Merkel faces re-election in September and the opposition social democrats are campaigning on what is a popular issue. |
| "Osborne has no veto over bonuses," said Sharon Bowles, the Libdem MEP who chairs the European Parliament's influential monetary affairs committee. "He may have to choose to accept it, or vote against it, but it will happen anyway." | "Osborne has no veto over bonuses," said Sharon Bowles, the Libdem MEP who chairs the European Parliament's influential monetary affairs committee. "He may have to choose to accept it, or vote against it, but it will happen anyway." |
| Last week's agreement, brokered by the Irish government, sets bonuses normally at a year's salary. This can be doubled if a "super-majority" of a bank's shareholders so decide. In a slight concession to British arguments, the deal also discounts bonuses paid in share options deferred for five years. | Last week's agreement, brokered by the Irish government, sets bonuses normally at a year's salary. This can be doubled if a "super-majority" of a bank's shareholders so decide. In a slight concession to British arguments, the deal also discounts bonuses paid in share options deferred for five years. |
| Despite the British resistance, all the signs are that popular revulsion at bankers' bonuses and the perceived failures of executives to rein in excess self-remuneration despite the trillions in public funds spent saving the banks since Lehman Bros crashed in 2008 are generating a head of steam for compulsory caps. | Despite the British resistance, all the signs are that popular revulsion at bankers' bonuses and the perceived failures of executives to rein in excess self-remuneration despite the trillions in public funds spent saving the banks since Lehman Bros crashed in 2008 are generating a head of steam for compulsory caps. |
| On Sunday the Swiss voted by a sweeping majority in a referendum for even tighter controls on bank pay, envisaging jail terms for those who break the new rules. | On Sunday the Swiss voted by a sweeping majority in a referendum for even tighter controls on bank pay, envisaging jail terms for those who break the new rules. |
| "The Swiss are showing us the way," said the French prime minister, Jean Marc Ayrault. | "The Swiss are showing us the way," said the French prime minister, Jean Marc Ayrault. |
| On Monday the Italian business newspaper, Il Sole 24 Ore, called for a new international system regulating bankers' pay. | On Monday the Italian business newspaper, Il Sole 24 Ore, called for a new international system regulating bankers' pay. |
| Tuesday's decision, followed by a formal vote in the parliament in May, represents a watershed for the British in Europe since it is an unwritten rule that EU governments never vote against a big member state on an issue of vital national importance. London is the EU's financial capital by some distance. Compared to other member states, the financial sector plays a disproportionately greater role in the UK economy. | Tuesday's decision, followed by a formal vote in the parliament in May, represents a watershed for the British in Europe since it is an unwritten rule that EU governments never vote against a big member state on an issue of vital national importance. London is the EU's financial capital by some distance. Compared to other member states, the financial sector plays a disproportionately greater role in the UK economy. |
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