A farewell to arms

11 Oct 2010 By Peter Thal Larsen Follow @Peter_TL

The head of Britain s employers federation wants banks to rein in pay and refrain from poaching staff while austerity measures bite. Unfortunately he has little chance of being heard. But the political consequences of failing to show restraint will be serious.

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Richard Lambert, directorgeneral of the Confederation of British Industry, on Oct. 11 called for investment banks to agree a "global ceasefire" on paying bonuses and poaching staff as the government imposes spending cuts.

"If trust has to be built on a sense of fair dealing, then the combination of pay freezes and job losses in the public sector with large bonuses in the City would be toxic in the extreme," he said in a speech at an event hosted by Bloomberg.

"This exceptional combination of circumstances will require exceptionally sensitive handling, preferably with the major global institutions acting collectively when it comes to compensation matters, and resisting the temptation to poach disaffected mega stars."

"This is no easy matter. But the political costs of failing to agree a global ceasefire are likely to be substantial. It won't be enough to say that without a level playing field around the world, nothing can be done."

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