Project Merlin is even weaker on pay than it is on tax and lending:
Following these discussions, the four banks confirm that the aggregate 2010 bonus pool (including deferrals) for their UK-based staff will be lower than that of 2009.
For all practical purposes that is their commitment.
To say Osborne has been taken for a ride is to massively understate the case.
The banks have taken him and us to the cleaners, again.
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The vast majority of bonuses in London are NOT paid by UK institutions. Over half are paid by US insitutions (JPM,GS, MS, etc.) and most of the rest by European firms (Deutsche, CS, UBS, etc.). The UK government is largely powerless at regulating these institutions’ compensation policies.
So whatever agreement the UK government strikes with the UK money centers like Barclays, RBS, etc., while a political crowd-pleaser, will have no impact on overall remuneration in London. This can only be achieved cooperation with international partners, most of which (especially the US) have shown no interest for.
In absence of an international consensus on the issue, or at minimum of any sign US interest in picking it up, you are really chasing a rainbow.