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Osborne in battle to weaken EU bankers' bonus cap plans Osborne in battle to weaken EU bankers' bonus cap plans
(about 7 hours later)
Chancellor George Osborne flies to Brussels later determined to water down the European Parliament's proposals to curb bankers' bonuses.Chancellor George Osborne flies to Brussels later determined to water down the European Parliament's proposals to curb bankers' bonuses.
But EU finance minsters in the Economic and Financial Affairs Council (Ecofin) are expected to approve last week's proposals.But EU finance minsters in the Economic and Financial Affairs Council (Ecofin) are expected to approve last week's proposals.
They include limiting bonuses to 100% of a banker's annual salary, or to 200% if shareholders approve.They include limiting bonuses to 100% of a banker's annual salary, or to 200% if shareholders approve.
The City of London fears the rules will drive away talent and restrict growth.The City of London fears the rules will drive away talent and restrict growth.
Mayor of London Boris Johnson has dismissed the idea as "self-defeating". London is the EU's largest financial centre.Mayor of London Boris Johnson has dismissed the idea as "self-defeating". London is the EU's largest financial centre.
On Monday, a spokesman for Prime Minister David Cameron said: "We continue to have real concerns on the proposals. We are in discussions with other member states."On Monday, a spokesman for Prime Minister David Cameron said: "We continue to have real concerns on the proposals. We are in discussions with other member states."
But Mr Osborne's bargaining power may be weakened further by Switzerland's recent decision to cap bonuses paid to bankers and give shareholders binding powers over executive pay.But Mr Osborne's bargaining power may be weakened further by Switzerland's recent decision to cap bonuses paid to bankers and give shareholders binding powers over executive pay.
Some EU ministers have looked with approval on the Swiss move, made in a national referendum on Sunday.Some EU ministers have looked with approval on the Swiss move, made in a national referendum on Sunday.
"The Swiss often show the way and personally I think we should take inspiration," said French Prime Minister Jean-Marc Ayrault."The Swiss often show the way and personally I think we should take inspiration," said French Prime Minister Jean-Marc Ayrault.
'Unintended consequences'
Simon Lewis, chief executive of the lobby group the Association for Financial Markets in Europe, said the proposed measures were not just a threat to the City of London, but to Europe's competitive position in financial services.
He told the BBC: "If this goes ahead, you will see the law of unintended consequences. Salaries will go up, there will be less flexibility, and the banks will be less competitive."
Last week the Federation of European Employers questioned whether restrictions on bankers' pay exceeded EU powers.
There has been speculation that the UK may try to invoke a little-used "national interest" defence to block attempts to curb bonuses.
The so-called "Luxembourg Compromise" allows a member state to block a majority decision being taken if an issue is deemed to seriously affect "a very important national interest".
Late on Monday, France's Finance Minister Pierre Moscovici said the deal would not be renegotiated.
"Everyone must live with what is on the table," he told reporters after a meeting of eurozone finance ministers in Brussels. "I told George Osborne, when I was in London, these moral rules apply to everyone, even the City."