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Capping Bonuses for Bankers - Unintended Consequences
24th January 2014
Capping seems to be all the rage at the moment. We read of capping electricity and gas prices, capping welfare payments for families ... and now a proposed cap on bonuses for bankers is being put forward by the EU and by the Labour Party. In this article, Tim Harford cuts to the chase and highlights the contradictions in the EU blanket policy on capping bankers' bonuses. It is a good example of a policy where the unintended consequences include the probably that banking salaries would rise still further.Under the EU proposal, a cap on rewards would limit payouts to banking executives to annual pay - or twice that only if shareholders approve.Further reading:BBC - banking bonuses - how much do they matter?BBC Hard Talk: Adair Turner on the effect of a bonus cap on bank salaries
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Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.