London Compensation - Down Big Time
Vince Cable has vowed to slash 'excessive bonuses' in the city. Since the LD election manifesto stated they'd cap it to £2500 for all non execs, I'd say this could really reshape banking.
Bad times.
I'm all up for splitting up banking activities - I think it would be in the bank's interests to do so.
A levy seems dumb - it's clearly just going to increase the risk appetite of the bank by however much the forced insurance covers, and if they cap that, then they'll just pass the fees onto clients.
But I think that the bonus cut is going to really damage the city. If I can earn more money working less hours in some other city career, well it won't be long until I, and I expect a lot of other people jump ship (or move country; though I expect this will spread if it comes to light).
As a soon-to-be-banker, I do hope this all washes over before I'm in a position where my bonsues actually mean something. Until then, based on what's being reported, I'm quietly nervous and pessimistic about banker pay prospects.
Any thoughts?
2500? That sounds ridiculous, and if its all non-executives then that would effect MD's, associates, and analysts?
I can't believe that a country would ever pass such a ridiculous law, not even France.
That will never pass
Never underestimate the power of populism in Communist Britain. The LDs are the ones pushing for this, they have the conservatives by the balls and everyone knows it. I hope and pray it won't pass, and it probably won't, but I would not be surprised if it did.
It won't pass, in fact I think it's already been dropped. Do you really imagine Britain is going to fight tooth-and-nail to prevent EU hedge fund legislation with the one hand, while with the other hand decimating (actually, beyond decimating - this would kill far more than 10% of British finance) the industry? This doesn't have a chance.
The bank levy, on the other hand, is probably going to go through, and isn't that horrid an idea. Yes, it will raise fees a bit, but it makes sense to tax banks because they operate under implicit state guarantee, and the larger ones operate with oligopolistic pricing.
Time to jump to the buyside if we follow your line of thought.
It wouldn't surprise me. The British are profoundly communist. It's actually disgusting.
No more white powder for you my friend....
Agreed.
As discussed, this will never pass. Whilst the British public might dislike financiers of all sorts, they are not so retarded that they'll crush their own economy by forcing most (all?) finance functions overseas.
Bankers are relatively mobile. And business is certainly mobile. The work that gets done in London could (very) easily be done in Paris, Geneva, Frankfurt, or Dublin. And France, Switzerland, Germany and Ireland won't have any problem accommodating a few thousand wealthy bankers/traders/salesmen. They will welcome the influx of finance talent.
Would a cap of 2500 GBP on bonuses do this to London? Absolutely. Would such a law ever get passed? Absolutely not.
If any cap (even a relatively high one) gets passed, you'll see much larger base salaries as firms attempt to keep their money-makers.
this is just dumb, they probably lose more tax money for capping bonuses.
Laffer curve
explain
Lol, balbasur you are the smartest (and funniest) guy on here! I'm sure you know what the laffer curve is.
laffer - higher tax rates can actually cause lower tax revenues to the state.
Relevant from today's FT:
http://www.ft.com/cms/s/0/c0cbad42-614b-11df-9bf0-00144feab49a.html
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