Madsen Pirie

I was talking with a Liberal Democrat councillor who thought that things had been going rather well for those who supported more European integration.  I pointed to the Eastleigh by-election where the United Kingdom Independence Party had come out ahead of the Conservatives, and to the Italian elections, where Silvio Berlusconi had staged a comeback, and Beppe Grillo’s anti-establishment Five Star Party had also done well.  While conceding that neither of these results was particularly good for pro-Europeans, he thought the EU had redeemed itself by moving to ban banker bonuses of more than twice salary.  He thought that bankers were even more unpopular than Eurocrats, and that this would be popular.

The move is, of course, unutterably stupid.  It moves to stop reward being linked to performance, which provides incentive to do well.  The bonus system makes bankers’ rewards very elastic.  They can be high in times of success and be cut back in a downturn, unlike basic salary.  The first thing the new EU action will do is to give a massive boost to bankers’ salaries as banks bid to retain top people without a bonus system to do it with.  I doubt that “Eurocrats boost bankers’ salaries” headlines are going to go down all that well.  No, this was yet another downer for the pro-EU crowd, not least because it is finally tipping opinion in the City.  Bosses in the finance sector have long backed the EU because they liked the great size of its market.  Now more of them are coming round to opposing the incompetence of its legislators.

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