European Union

Tip bankers like waiters

1 Mar 2013

Forget Europe’s bonus caps for bankers. Why not put a ceiling on salaries and let clients reward good service, just as they do in restaurants? Banker pay could shrink to a more realistic level. After all, this is a business that likes to boast about serving its customers.

UK’s EU problem becomes more pressing

1 Mar 2013

European Council President Herman Van Rompuy threw cold water on Britain’s request to renegotiate European treaties, just as a eurosceptic party pushed the UK conservatives to third place in a by-election. David Cameron may have to pen a clear EU policy sooner than he thought.

Time to think of salaries for performance

28 Feb 2013

The EU is curbing the ratio of bonus to salary for bank staff. In most businesses, such a rule would simply capture economic reality. If pay reflects performance, salaries should usually comprise most of the package. Banks are different - because their business models are flawed.

EU bonus lesson: self-regulate or worse follows

28 Feb 2013

Caps on the ratio of fixed to variable banker pay are being imposed at just over 1:2 depending on how much bonus is deferred. Regulating income is an unwelcome post-crisis milestone. It is also a warning to banks and big business: self-regulate or get misguided rules from above.

Riposte: Bank bonuses deserve to be capped

19 Feb 2013

The question on bankers’ pay is not whether it’s too high, but how best to make it lower. Ideally, market forces and capital regulations will do the job, but progress is slow. Bonus limits are crude, but likely to be effective. A new EU rule could start a downward race.

Central banks are globalisation’s new enemy

15 Feb 2013

Nearly every part of the economy is becoming more global. Trade is already so free that the proposed U.S.-EU Trade and Investment Partnership would produce only modest gains. So why are central banks stuck in a nationalist past? They’re in urgent need of globalised thinking.

Loyalty dividends offer antidote to short-termism

12 Feb 2013

The EU is mulling plans to combat short-termism among institutional investors. One idea, to give shareholders variable voting rights, could create harmful inequalities and governance headaches. But rewarding loyalty through higher dividends is sensible and fair.

UK shouldn’t quit the EU – it should join the euro

4 Feb 2013

After a bad crisis, the UK isn’t close to qualifying for the single currency, and the current prime minister isn’t tempted. But the reasons given for the last official rejection, in 2003, now look weak. The economic case against an independent pound is stronger than ever.

More Europe can mean less bureaucracy for the UK

31 Jan 2013

In his big speech on Europe, the UK’s prime minister said unnecessary regulation was stifling British competitiveness. But would-be isolationists ignore the reality that separation also raises impediments to growth. Take the much-maligned Schengen border accord, for example.

European carbon market doesn’t need a supply fix

29 Jan 2013

Collapsing carbon prices have policymakers racing to shore up the EU’s emissions trading scheme. But even if the value of permits fell to zero, the level of emissions would stay below the limit agreed for 2020. Authorities should rethink the cap, not fiddle with supply.

Robin Hood tax is proving Cameron wrong on Europe

23 Jan 2013

The financial transaction tax that 11 EU countries want to implement is a case study of David Cameron’s self-defeating approach to Europe. Refusing to engage with its partners means London will bear the consequences of decisions taken without the UK’s participation.

Hugo Dixon: UK faces five years of limbo-land

23 Jan 2013

The promise of referendum on Britain’s membership of the EU by end-2017 means a long period of uncertainty which will be bad for investment. It also heightens the risk of a “Brexit”. There is an opportunity here, however, to press for more competitiveness and less centralisation.

Cameron bets big on confused European ideas

23 Jan 2013

The British prime minister’s vision of a largely economic European Union may play well at home, but is far too simplistic for today’s EU. The UK referendum on membership is a pointless distraction. It will reduce British clout in Europe and discourage business activity.

Goodwill is accounting at its most confused

22 Jan 2013

A European regulator has complained that goodwill writeoffs are inadequate. Inconsistency is one issue. The main problem is that the rules make no sense. They rely on a melange of traditional cost-based record-keeping, doubtful financial theory and blind trust in markets.

Cameron’s speech could leave Europe indifferent

17 Jan 2013

The UK prime minister will explain his European strategy at last on Friday. He’s expected to demand reforms and threaten to leave the EU if he can’t get a deal. Other member governments may just yawn. They are losing interest in the possibility of a “Brexit”.

Europe’s two challenges: economy, unity

24 Dec 2012

The euro crisis will become the European crisis as governments realise that among all the things they’ve done in the last two years, austerity is what has failed. And the split will widen inexorably between the 17-member zone and the rest of the EU.

UK banking union concessions don’t count for much

13 Dec 2012

Britain’s newly won safeguards to protect its big financial sector are worth having. But they may be revisited if most non-euro zone states join the new ECB-controlled bank union. And it will in any case be hard to avoid moving in step with new initiatives pushed by Frankfurt.

EU shows it can bank on its union after all

13 Dec 2012

The deal Europe struck on the banking union has all features of a good European compromise. Amazingly, it even managed to make the Brits happy. Against all odds, the EU is functioning. It needs to work, because there are still huge problems to solve.

Hugo Dixon: Dos and Don’ts of EU banking union

10 Dec 2012

The conventional wisdom holds that the euro zone needs banking union to solve its crisis. That’s wrong. There are alternatives. What’s more, centralisation will undermine sovereignty. That said, if merged banking regulation is the goal, the euro zone needs more than a fudge.

Banking union is on the way. Resistance, too

5 Dec 2012

All the differences between France and Germany on the euro zone common banking regulator can be surmounted by compromises. The main questions are how long it will take to find them, and whether the ECB will be energetic enough to overcome the inertia of 17 national regulators.