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Brown, Sarkozy in united front on bank bonuses

British Prime Minister Gordon Brown and French President Nicolas Sarkozy urged other leaders to impose a tax on bankers' bonuses, in a united front amid tensions between London and Paris.

business Updated: Dec 10, 2009 08:03 IST

British Prime Minister Gordon Brown and French President Nicolas Sarkozy urged Thursday other leaders to impose a tax on bankers' bonuses, in a united front amid tensions between London and Paris.

Brown and Sarkozy called for a new agreement between banks and society in the wake of the global financial crisis, in a joint article in Thursday's edition of the Wall Street Journal.

The article comes as both leaders prepared to meet in Brussels Thursday ahead of a European Council gathering, amid suggestions of a simmering row between the two countries over EU financial reform.

"There is an urgent need for a new compact between global banks and the society they serve," they said.

"We propose a long term global compact that will encapsulate both the responsibilities of the banking system and the risk they pose to the economy as a whole."

"We agree that a one-off tax in relation to bonuses should be considered a priority due to the fact that bonuses for 2009 have arisen partly because of government support for the banking system."

Britain announced Wednesday it was slapping a one-off 50-percent tax rate on bonuses above 25,000 pounds (27,600 euros, 40,700 dollars) to recoup cash spent saving the financial sector during the crisis.

Both countries have traded barbs since former French minister Michel Barbier was appointed EU commissioner in charge of financial services, with Sarkozy saying Britain "were the big losers" in the carve-up of new EU jobs.

Barnier's appointment sparked outrage amongst British officials, who fear he is too anti-free market and could pose a serious threat to the City of London as a major financial hub.

Brown and Sarkozy then scrapped a planned meeting in London last week, prompting talk of a row over the appointments and the French leader's remarks.

France also denied Tuesday it had snubbed Britain by not inviting its agriculture minister to Paris talks on the future of Europe's farm subsidies.

The move has been portrayed in the British press as a slap in the face for Brown's government.

In the newspaper article, the leaders said coordinated regulation was needed globally to reduce risks to taxpayers forced to foot the bill from the crisis.

"Better regulation and supervision are the means by which the risk to the taxpayer can be reduced for the longer term."