A spokesman for David Cameron has commented on the EU bank bonus cap saying that "we continue to have real concerns on the proposals. We are in discussions with other member states." The ruling is to be discussed at a meeting of EU finance ministers tomorrow.
Allister Heath has written on the possibly disastrous effects of this measure:
It involves the biggest violation of the right of companies and employees to freely determine pay since the price and wage controls of the 1970s, hugely distorting price signals. What will start with banks will end up being applied to everybody.
It wrongly assumes that success should not be rewarded – of course, badly designed contracts can incentivise bad outcomes, but the challenge is to design contracts properly and put in place strict monitoring systems to prevent unintended consequences – such as excessive risks, Libor-style fraud, or other improper behaviour motivated by the hope of making higher bonuses. It’s not rocket science to design a system that works; yet the EU wishes to throw out the baby with the bath water.