Will the U.K. Chancellor Alistair Darling claw back bankers' bonuses via a super tax levied on what is being referred to politely as "extraordinarily high" payouts for the City's top earners this year or will he back down? In case you haven't already guessed, the U.K. is gearing up for a general election in 2010 and one of the most controversial issues is bankers' pay. In fact, it seems to be THE topic of conversation on the dinner and cocktail party circuit this holiday season.
This is likely to have a very real and direct repercussion on certain segments of the luxury industry, namely high-end cars and watches, traditionally the preferred "toys" of the financial set. After all, how better to advertise the size of one's bonus across a boardroom table than a watch that requires a few extra sets of weights in your training routine just to lift your arm? An added measure of uncertainty in the midst of the Christmas shopping season is the last thing the beleaguered luxury watch and car sectors need at this point.
While there is an obvious moral issue associated with U.K. banks paying out record bonuses to top earners after having received massive taxpayer-funded bailouts last year, there are a number of obstacles in the Chancellor's way including anti-discrimination legislation and the potential loss of status of London's financial sector if top bankers flee to more tax-friendly locales. Even the Grinch backed down in the end, didn't he?
Sincerely,
The Luxe Chronicles
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