Page last updated at 20:05 GMT, Thursday, 10 December 2009

Brown and Sarkozy 'agree on bank bonuses'

British PM Gordon Brown and French President Nicolas Sarkozy
The leaders say only global change will restore confidence in banking

The UK and France are working together on curbing bank bonuses, Gordon Brown has said, after holding private talks with Nicolas Sarkozy.

The UK prime minister and the French president met ahead of a meeting of European Union leaders in Brussels.

Mr Brown said France supported the UK's stand on one-off bonuses.

However, he avoided commenting on the controversial appointment of a Frenchman, Michel Barnier, to oversee European banking.

It was the first time Mr Brown and Mr Sarkozy have met since the French president appeared to boast that Mr Barnier's appointment was a defeat for UK free-market economics.

"That is not an issue," Mr Brown said.

He added that France and the UK shared common ground on a number of issues from climate change to economic recovery and bank bonuses.

"The French agreement to support what we are doing with one-off bonuses is very important.

"There is a one-off National Insurance premium to be paid by the City, and that will happen in France as well."

'Attractive idea'

Earlier, Mr Brown and Mr Sarkozy issued a call for financial reform.

This came in a jointly written article in the Wall Street Journal, in which they said that a one-off tax on bank bonuses should be "considered a priority".

This article came after UK Chancellor Alistair Darling announced in Wednesday's pre-Budget report that a new one-off tax of 50% would be introduced on banking bonuses of more than £25,000.

Reports on Thursday have suggested that the French government is considering a similar tax on the bonus payments made by French banks, levied on bonuses of more than 27,000 euros ($40,000; £24,500).

Meanwhile, German Chancellor Angela Merkel described the UK bonus tax as an "attractive idea".

However, she gave no indication as to whether Germany would follow the UK's move.

Diplomatic row

The talks between Mr Brown and Mr Sarkozy come two weeks after it was announced that Mr Barnier - a former French agriculture minister - would take the internal market post in the new 27-strong European Commission.

We must ensure that through proper regulation, the financial sector operates on a level playing field globally
Gordon Brown and Nicolas Sarkozy

This position, which will give Mr Barnier responsibility for reforming the European banking sector, led to fears in the City of London that he might introduce excessive regulation that could stifle the decision-making freedom of UK banks.

Mr Barnier's appointment was said to have caused tension between London and Paris, not helped by Mr Sarkozy using a newspaper article to blame "Anglo-American" finance for sparking the crisis in the financial markets.

In the aftermath, a meeting due to take place last week in London between Mr Brown and Mr Sarkozy was cancelled.

Tony Travers, political scientist at the London School of Economics, said Mr Brown would probably be seeking assurances from Mr Sarkozy about Mr Barnier's plans.

"Britain will continue to want to ensure that regulation of all kind, particularly regulation of labour market and financial services, is not damaged by Franco-European policy making," said Mr Travers.

Mr Barnier has said he will work for the interests of the European Union as a whole. He has been invited to London by Mr Darling for talks and a tour of the City of London.

The UK government has also said it is pleased that some of Mr Barnier's key advisers will be British.

'Urgent need'

In their article, Mr Brown and Mr Sarkozy said the financial crisis had made them "recognise that we are now in an economy which is no longer national but global, so financial standards must also be global".

"We must ensure that through proper regulation, the financial sector operates on a level playing field globally," they said.

They added that there was an "urgent need for a new compact between global banks and the society they serve".

"A compact that ensures the benefits of good economic times flow not just to bankers but to the people they serve; that makes sure that the financial sector fosters economic growth.

"People rightly want a post-crisis banking system which puts their needs first. To achieve that, nothing less than a global change is required."



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FROM OTHER NEWS SITES
AFP via Yahoo! Britain, France unite behind bank bonus tax plans - 41 mins ago
Mail Online UK Brown calls on EU leaders to crack down on banking sector - 3 hrs ago
Boston Globe Brown, Sarkozy: Tax financial bonuses more - 4 hrs ago
CNN France follows UK lead on bank bonus tax - 6 hrs ago
Financial Post France may follow U.K.'s lead on bonus tax - 9 hrs ago



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