At the same time the international press is giving ample attention to UK Prime Minister David Cameron’s re-election promise of a referendum on whether to stay in the EU, it’s becoming clear which way the City of London boys in the financial district would vote – No! After much ballyhooing about banking reform – some of which is seeing the light of day – Brussels is now ready to implement firm rules governing bonuses and remuneration across Europe. This is proving to be a sticky subject, with many questioning the EU’s right to govern – is the UK ceding too much power to Brussels?
This debate, with all of its ramifications, was been tossed around for over a year with the UK attempting “to blunt a bonus crackdown,” according to the Financial Times. But now, France, and more importantly, Germany is joined in creating tough new Europe-wide legislation that will be hitting London hard. CNN reports “British officials are scrambling to secure revisions to the tentative compromise, which imposes a 1:1 bonus to salary ratio, which can be raised to 2:1 with the backing of a supermajority of shareholders.” Analysts believe it’s doubtful that London will be able to convince the EU members to alter their figures, but many of the new regulations are just a reinforcement of current UK rules – no cash bonuses that exceed salary pay and a cap on variable fixed pay, for instance.
But, this has the UK banks scared as the proposed cap might be a little to tight for comfort, CNN reports ‘Top bank chief executives have urged David Cameron to oppose the curbs vigorously. “The banks are panicking,” said one diplomat involved in the talks. “They always thought the UK and Germany would save them.”’ But Germany is now on side with the EU and Ireland, who is acting as EU president now and is aiming to get the dissenters in line. Unless a salient compromise is reached, this all just adds fuel to Cameron’s talk of an EU exit referendum.