Search

 

Cablegate: Chancellor Darling On Bankers’ Bonuses, Uk

VZCZCXRO3615
PP RUEHAG RUEHROV RUEHSL RUEHSR
DE RUEHLO #2225/01 2671616
ZNY CCCCC ZZH
P 241616Z SEP 09
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC PRIORITY 3597
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 LONDON 002225

SIPDIS
NOFORN

NSC FOR FROMAN
TREASURY FOR MURDEN/SOBEL

EO 12958 DECL: 09/24/2019
TAGS ECON, EINV, PGOV, AGMT, UK
SUBJECT: CHANCELLOR DARLING ON BANKERS’ BONUSES, UK
RECOVERY, AND LABOUR PROSPECTS

Classified By: Ambassador Louis B. Susman for reasons 1.4 (b) and (d).

1. (C/NF) Summary: Chancellor of the Exchequer Alistair Darling told the Ambassador during his September 23 introductory meeting that G20 governments must continue to implement stimulus packages and avoid complacency. Darling warned that if banks paid out large bonuses in 2010, they could provoke a political backlash and draconian legislation that would have unintended consequences. Governments needed to pressure the banks to exercise restraint. The Chancellor was cautiously optimistic that the UK economy would return to growth by year-end, but worried that the recovery remained fragile. Darling had sharp words for the Conservatives, who were campaigning on budget cuts, but unwilling to say what they would cut. He said that Labour was losing hearts and minds more than the Conservatives were winning people over. The Ambassador raised the issue of VAT charges on the London Embassy project and subsequently briefed U/S Kennedy by phone. End Summary. Recovery is Fragile and Banker Bonuses

Radioactive
--------------------------------------------- -----

2. (C/NF) The Ambassador said that the President was committed to a strong framework for growth at Pittsburgh and asked the Chancellor for his expectations from the G20 summit. Noting he was traveling to Pittsburgh early September 24, Chancellor Darling stressed the importance of continuing stimulus packages and avoiding complacency. Unemployment levels across the developed economies were high, continuing to rise, and risks to growth remained real. He cited IMF predictions that Germany could re-enter recession and expressed concern about the potential for higher oil prices. He noted that high public sector debt levels constrained governments, room for maneuver. On pay and bonuses, Darling cautioned that banks needed to exercise restraint. With spring UK elections in mind, he said that if banks announced large bonuses early in 2010, the pressure for draconian legislation would be politically irresistible. He expressed concern that a political backlash could produce legislation that had unintended consequences and cited Sarbanes-Oxley as an example. He said governments needed to persuade bankers not to do something stupid in the coming months. Cautious Optimism on Recovery
-----------------------------

3. (C/NF) On the UK economy, the Chancellor remained cautious, but expected a return to growth by the end of the year. But he cautioned that it would be &foolish to announce victory.” He said that the UK’s heavy dependence on services, and especially financial services, meant that UK growth would lag behind other economies and depend on their growth. He added that if businesses and the public see recovery, they will spend. U.S. Committed to Address Climate Change
---------------------------------------

4. (C/NF) The Chancellor asked about the prospects for climate change legislation. The Ambassador referred to the President’s September 22 speech at the UN Climate Change Summit and highlighted his commitment to address climate change through strong administrative measures and through legislation. Noting the determination of White House and Congressional leaders, the Ambassador expressed confidence that Congress would pass legislation. Labour Losing Hearts and Minds
------------------------------

5. (C/NF) Responding to a question on the UK election, Darling said that the Conservatives may think they can run a campaign on cutting spending without specifying what they are going to cut, but this will become less and less tenable. He said it is in the nature of the opposition to criticize without offering up specifics. In the meantime, he said that Labour would &fight like hell for re-election.” Darling was sanguine about Labour’s challenge ) &the problem is not that the Conservatives are winning hearts and minds, rather that we are losing them.8 He said that Labour needed to regain the confidence of the public that they can win. VAT Exemption on New Embassy Unlikely
-------------------------------------

6. (C/NF) Ambassador raised the new embassy project at Nine Elms, noting that the USD 1.2 billion project would spur redevelopment of a blighted area and create jobs. He said that as a matter of principle, the UK should not impose value-added tax on the construction of a chancery building. Darling responded that the government could not exempt the project from VAT, citing the recession, tight budget and elections. Ambassador noted that construction was projected
LONDON 00002225 002 OF 002
to start in 2012 and urged the Chancellor to work with him to find a solution.
Visit London’s Classified Website: http://www.intelink.sgov.gov/wiki/Portal:Unit ed_Kingdom
SUSMAN

© Scoop Media

 
 
 
World Headlines

 

Euro-Med Monitor: Updated Report On The Israeli Massacres During The Military Attack On The Gaza Strip

Geneva – The Israeli forces has killed and maimed many Palestinians in deliberate targeting of unprotected homes with families inside in inhumane military operations, Euro-Mediterranean Human Rights Monitor said. Since the beginning of the current ... More>>

IPPPR: The Independent Panel Calls For Urgent Reform Of Pandemic Prevention And Response Systems

Expert independent panel calls for urgent reform of pandemic prevention and response systems The Independent Panel for Pandemic Preparedness and Response is today calling on the global community to end the COVID-19 pandemic and adopt a series of bold and ... More>>

NGO Coalition On Human Rights: Call For A Stop To Police Brutality In Fiji

A viral video has circulated online showing two police officers utilising disproportionate and excessive force in detaining the suspect, an individual half their size. In the video it shows the man’s head being pressed down on the ground, his arms being ... More>>


Focus On: UN SDGs

ILO Voices: A Future With Hope, Free From Bonded Labour

By Padma Kumari Tamata Formerly in bonded labour, Padma Kumari Tamata is now a farmer, and grows and sells her own vegetables in the Kanchanpur district of Nepal. My name is Padma and I come from Vashi, a small hamlet in Nepal’s far-west Kanchanpur district. ... More>>

UN: Economic Recovery Under Threat Amid Surging COVID Cases And Lagging Vaccination In Poorer Countries

New York, 11 May — While the global growth outlook has improved, led by robust rebound in China and the United States, surging COVID-19 infections and inadequate vaccination progress in many countries threaten a broad-based recovery of the world ... More>>

Study: Cut Methane Emissions To Avert Global Temperature Rise

6 May 2021 Methane emissions caused by human activity can be reduced by up to 45 per cent this decade, thus helping to keep global temperature rise to 1.5 degrees Celsius in line with the Paris Agreement on climate change, according to a UN-backed ... More>>