The decision this week of the European Union to cap the bankers’ bonuses is a true step in the right direction to regulate the financial markets. The harsh reaction of the City of London shows clearly how necessary this decision was and how outraged these so-called elite-bankers are.
This strong opposition has also been supported by David Cameron and Boris Johnson who are concerned that capping bonuses at a basic salary will scare banks away from London.
It is no longer acceptable that banks report huge losses whilst at the same time dish out very generous bonuses. For instance, in 2012 Royal Bank of Scotland reported losses of more that £5bn after paying out more than £600 million in bonuses.
We should recall ourselves that the bankers gambled the world and Europe into the deep crisis to which the severe consequences we are witnessing for several years now. The tax-payers had to procure the money to rescue most of the banks from bankruptcy and only now it is the first time that they will be requested to accept some responsibility towards society. This has been a long in waiting.
After the decision of the financial transaction tax and now the cap of the bonuses we are a step closer to the matter that the financial markets have to serve the people and not that the people should serve the markets.
However the battle is not yet won and the next issue is tax evasion and tax fraud. An estimated 1 trillion € in public money is lost to tax fraud and tax avoidance every year in the EU. This represents roughly yearly costs of 2000€ for each and every European citizen. See Mojca KLEVA KEKUS written contribution to FEPS Renaissance for Europe event in Turin.
Let us imagine that if the money collected from financial transaction taxes, unpaid bankers’ bonuses and tax fraud and evasion is put together on the table it could be spent much more wisely. For instance, investing in education, research and innovation would create jobs and growth and foster our European social security systems.
European citizens would be in a much better social and financial situation. We would also have lower risk in countries such as Italy where populists are winning elections and putting Europe even deeper in crisis.