Banker bonus cap: George Osborne dealt legal blow in battle with EU Mr Osborne, the only finance chief in the EU to vote against the bonus cap, has repeatedly clashed with his counterparts in Europe over legislation that disproportionately affects the UK, but has had little success in blocking changes. Although the Advocate General's opinion is not binding, judges at the ECJ will consider it when making their final decision next year, and in reality very rarely go against the opinion. However, Treasury officials seized upon Mr Jääskinen's admission that banks may simply increase fixed salaries in response to the cap, which limits bonuses to 100pc of salaries or 200pc with shareholder approval. One of the six arguments in the Treasury's case is the idea that this undermines that financial stability argument for it. "Fixing the ratio of variable remuneration to basic salaries does not equate to a 'cap on bankers bonuses', or fixing the level of pay, because there is no limit imposed on the basic salaries that the bonuses are pegged against," he said. A Treasury spokesman said this "demolishes the case for the fixed ratio." "This is precisely the reason why we, the PRA and the Bank of England have been opposed to this policy," the spokesman added. Nonetheless, the Advocate General rejected all six arguments made by the UK. Mr Jääskinen said: "Given that the variable component of remuneration impacts directly on the risk profile of financial institutions, it can affect the stability of financial institutions who can operate freely across the EU." He suggested that "all the UK's pleas should be rejected and that the Court of Justice dismiss the action." Senior figures in the Treasury, industry and Bank of England have said that the cap is conflicts with recent reforms that allow banks to defer and claw back bonuses, a move designed to make senior bankers more responsible for their actions. Earlier this week, Mark Carney, the Governor of the Bank of England, even suggested that bankers' salaries may have to be vulnerable to claw-backs as a result of the cap. A spokesman for the BBA, which represents the industry, said: "We believe this law runs counter to recent reforms and will make the system less robust by incentivising firms to increase fixed pay. It also puts European banks at a disadvantage when competing with firms in other parts of the world.