Johnson rails at bank bonus cap
Mayor of London Boris Johnson unveils a plaque to mark the official opening of a youth club. Mr Johnson was strident in his defence of the City of London financial centre. photograph: yui mok/pa
London mayor Boris Johnson has renewed his assault on Brussels over its bankers’ bonus cap, describing the European Parliament’s plans to limit payouts as a “moronic piece of economic policy”.
As European finance ministers meet tomorrow to finalise details of the scheme, Mr Johnso said the measure would hit Europe’s financial services industry, driving bankers to rival centres such as Zurich, Singapore or New York.
“I object in principle to the idea of trying to regulate remuneration in that kind of detail from Brussels . . . You can’t really fix wages and prices in that way. It doesn’t work like that,” he said.
Brussels has provisionally agreed regulations it says will curb “excessive risk-taking” by specifying a 1:1 ratio on bonus relative to salary, rising to 2:1 if shareholders give approval.
Mr Johnson said the City of London had come under regular attack from other European countries that sought to use EU rules to reduce its dominance.
“Chronically and historically, of course, our friends . . . have long looked at London with feelings of envy and a certain desire to take us down. They use the threat of EU directives to achieve that.”
But they had failed to gain much headway in the past 40 years, he said. “Even in Paris, even in Berlin, they understand that what Europe needs is a global financial centre that can go toe to toe with New York, raise capital and compete with the best of the world.”
Mr Johnson has often championed the City when other politicians have condemned it. The Tory mayor pushed hard for last year’s cut in the 50p higher income taxrate for top earners.
However, asked if he thought banks would be justified in raising basic salaries to compensate for the new rules, Mr Johnson said he sided with those who thought bankers are paid an exorbitant amount. “I’m not in favour of these stonking great bonuses,” he said.
He added that some banks were not doing enough to ensure their lowest-earning workers were properly paid. “They could and they should pay everybody the London living wage of £8.30 [an hour] (€9.59) minimum . . . Never mind the millions they pay themselves in bonuses.”
His comments come after a difficult week for his party, which was pushed into third place by its Lib Dem coalition partners and a surge by the Eurosceptic UK Independence Party at the Eastleigh byelection.
He said British prime minister David Cameron would resist pressure to move to the right in response to the Ukip threat. “The prime minister won’t be lurching off in one direction or another,” he said.
One of the party heavyweights who visited Eastleigh during the campaign, the mayor defended the Tory performance, saying the party had been “by no means exterminated” in the poll. Its share of the vote fell by 14 per cent.
– (Copyright The Financial Times Limited 2013)