Chancellor George Osborne has abandoned the UK’s legal challenge to the EU cap on bankers’ bonuses after it was dealt a major blow yesterday.
Osborne has dropped the challenge after admitting there are “minimal prospects for success”.
Yesterday the advocate general of the European Court of Justice rejected the UK’s legal arguments against the proposal to restrict bonuses to 100 per cent of the banker’s pay or 200 per cent with shareholder approval.
Advocate general Niilo Jaaskinen decided the cap is legally valid, and while the court was not bound to follow his opinion in making its final decision next year, his views would have been influential.
In a letter to Bank of England governor Mark Carney, Osborne said: “It now looks clear that there are minimal prospects of success with our legal challenge, so we will no longer pursue it.
“But that should not stop us from pursuing our objective of ensuring a system of remuneration that encourages responsibility instead of undermining it.”
Osborne argues the cap will push up basic pay, which would be more difficult to claw back when things go wrong.