Debate: Was Boris Johnson right to call EU bonus cap a ‘moronic’ idea?


Independent Voices
Sunday 03 March 2013 16:52
Johnson reveals that university he was an environmentalist
Johnson reveals that university he was an environmentalist

What's going on?

Mayor of London Boris Johnson has condemned EU plans to limit bankers' bonuses to double or treble their base salaries as a "moronic piece of economic policy".

MEPs in Brussels drew-up the plans in the wake of growing anger at the runaway sums bankers can command on top of their wage. It is also hoped the initiative will curb the kind of "excessive risk taking" that led to the 2008 financial crisis.

Johnson voiced concerns that any limit on payouts, which European finance ministers are scheduled to discuss in detail on Tuesday, will hit the competitiveness of London's financial sector and lead to job losses.

He added: "I object in principle to the idea of trying to regulate remuneration in that kind of detail from Brussels".

Does Bo-Jo have a point?

Case for: Suffer together

A bonus cap smacks more of vengeance than of competent policy-making. Damage the competitiveness of Britain's financial sector and it won't be the bankers who suffer - they can move abroad if London's still-extremely-high pay disappoints - it will be the rest of society. Even if you favour stronger regulation of the city, this is not the way to go about it. It's unlikely to curb risk-taking - and the galling boom in pay via salaries (37% across the EU in the last four years) will only speed up to compensate.

Case against: Toughen up

That Boris Johnson has pals in the city - and is likely to want to protect them - is a criticism so often employed as to be almost threadbare. But that does not make his latest outburst any less suspicious. For too long the UK government has mollycoddled the very people whose risk-taking put us in the economic mess we find ourselves in now. Strong regulation is vital to ensure nothing similar happens again. The only pity here is it took European intervention to take the difficult decision.

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