BRUSSELS/LONDON (Reuters) – Britain suffered an embarrassing defeat in its attempt to block the European Union’s new limits on bank bonuses on Thursday, withdrawing its legal challenge after an adviser to the bloc’s top court made clear it was unlikely to succeed.
The EU law aims to curb the kind of risk-taking that led to the 2007 to 2009 financial crisis by limiting bonuses awarded from next year to a sum no more than a banker’s fixed pay, or twice that level with shareholder approval.
Britain, home to the City of London where most of the bankers hit by the cap are based, said the law would push up fixed pay and goes beyond the EU’s powers, a sensitive subject at a time of rising British anti-EU sentiment.
However, Chancellor George Osborne was forced to concede defeat after an adviser, whose opinions are non-binding but are generally followed at least in part by the Luxembourg-based European Court of Justice, said he supported the limit on banker bonuses and that it did not restrict total pay.
“I’m not going to spend taxpayers’ money on a legal challenge now unlikely to succeed,” Osborne said in a statement. “The fact remains that these are badly-designed rules that are pushing bankers’ pay up, not reducing it.”
Earlier, an ECJ statement said Advocate General Niilo Jääskinen had suggested the Court of Justice reject Britain’s action.
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