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Now Gordon Brown backtracks on banking bonuses

Gordon Brown stepped into the banking bonus argument with confirmation that the Royal Bank of Scotland will not be singled out with regards to restrictions on bonuses and salaries. This is a roundabout way of saying that the UK government is unlikely to step in and block any suggested bonuses for Royal Bank of Scotland staff, after the announcement that the Royal Bank of Scotland board would have considered their position if the government had intervened.

While perhaps not a direct U-turn on the earlier promise to reduce bonuses and salaries, in order for Royal Bank of Scotland to participate on a level playing field it will have to be in the same position as the likes of Barclays, HSBC, etc over which the UK government has no direct control via share stakes. As a consequence it looks as though the plan to reduce bank salaries and bank bonuses has hit a brick wall and is likely to be dropped very quietly over the next few days and weeks.

In many ways the UK government has done everything it set out to do with regards to banking bonuses and salaries because the press comment has always suggested the government is on the side of tax payers when in reality there is a major conflict of interests. The financial sector is the engine room of the UK economy and the UK government was never likely to starve it of much-needed fuel!

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