March 5 - Britain's Finance Minister George Osborne was isolated when he met with his EU counterparts on Tuesday, as the UK is the only member state which wants to water down a European cap on bankers' bonuses. The City of London is the region's financial centre, and the British government is afraid of an exodus of bankers and staff. Joanna Partridge reports
On a mission. British Finance Minister George Osborne headed to Brussels hoping to persuade his EU counterparts to water down their plans to cap bankers' bonuses. But he didn't find much support. Last week, the EU parliament agreed on measures to prevent bankers getting bonuses bigger than their annual salaries. It's popular with voters but the draft legislation hasn't gone down well in the City of London, Europe's financial capital. Osborne told the other finance ministers a cap would have a "perverse" effect, and push up salaries. It would be harder to claw back bonuses when things go wrong. But the only concession he won was a postponement of the final decision. German Finance Minister Wolfgang Schaeuble said he wanted a deal which Britain agreed with. SOUNDBITE: Wolfgang Schaeuble, German Finance Minister, saying (English): "There is broad political support for this compromise, also from the parliament. There are a few technical questions that need to be further worked on. I hope that with the clarification of these technical questions we will ensure that the United Kingdom will be able to come to an agreement with the others by the time we reach the official approval at the end of the process." UK media reports have suggested some of the City's big banks are considering a lawsuit against the EU. Alastair McCaig from IG Index doesn't think that's very likely. SOUNDBITE: Alastair McCaig, Analyst, IG Index, saying (English): "It's slightly puzzling as to who exactly might be part of this and exactly how flexible the EU might be in regards to their policies here. Certainly the UK stands alone in their ethos of their bonus structure as far as the City is concerned, and the City of London for a long time has been viewed as the real powerhouse of finance as far as Europe is concerned." London fears the new rules might lead to an exodus of major banks and staff. But the UK's HSBC, which has threatened to move in the past, says it doesn't have any current plans to leave. Osborne doesn't want to give them any excuse to change their mind. But he can't veto the new measures, as they'll be passed with majority support.