George Osborne withdraws challenge to bonus cap after legal blow The Government is believed to have spent £46,000 on legal fees mounting the challenge. Alongside the statement, the Treasury published a letter Mr Osborne has written to Mark Carney, Bank of England Governor, in the latter's role as chairman of the Financial Stability Board, calling for the need for an international solution on remuneration claw-backs in the banking sector. The climb-down followed Niilo Jääskinen, the European Court of Justice Advocate General, saying that EU legislation pegging bonuses to banker salaries was "valid," despite conceding that banks were able to respond to the cap by increasing salaries. Senior figures warned that the decision, though expected, would further increase tensions between Brussels and the City, and reduce Europe's position on the global financial stage. Mark Boleat, policy chairman at the City of London Corporation, said it "may well drive talented people to our competitors in the global marketplace," and Syed Kamall, the Conservative Party's leading MEP, said it would "further tarnish UK public opinion on Europe."