Because of proposals that are coming out of the EU Conservatives find themselves in the uncomfortable position of fighting on behalf of big banks.
At Prime Minister’s Questions today Ed Miliband made some easy attacks on the Government’s position that capping bonuses will damage the UK’s financial service sector. I say easy attacks because banks and bankers are hugely unpopular at the moment, and are likely to remain so for quite some time, yet the incomes from financial services currently underpin the UK economy and tax revenues pay for a big part of government spending. Damaging the UK’s competitiveness in this sector would be bad for all of us.
The EU nations voted 26 to 1 in favour of capping bank bonuses, I wonder how many of those twenty 26 rely as heavily on financial services as we do. Would Germany support measures that damaged their car industry? Would France agree to anything that hampered their farmers? I strongly doubt it.
We should diversify our economic base, it would be better if we had a more mixed portfolio of successful business sectors providing good salaries and tax revenues, but we aren’t there yet. Until we are, and even then, it would be stupid to cut our own economic nose off to spite our face.
The proposals themselves are at best poorly thought through and at worst vindictive and dangerous. The biggest farce is that no one knows if they will even work, will banks just ramp up salaries, use ways of passing on the money through means other than bonuses, etc etc?
Multi-millionaire bankers are never going to be the objects of our sympathy, our position on their bonuses isn’t about them, they’ll be all right whatever happens. If London stops being a fertile place to do business and become rich they’ll go somewhere else and do it there, they will also take their disposable incomes, personal and corporate tax revenues with them. They will still be rich but the UK will be poorer.