Osborne files bonus complaint

George Osborne has filed a formal complaint against Brussels over plans to cap bankers' bonuses due to fears the move will backfire and drive up salaries.

Latest ITV News reports

Chancellor picks fight with EU over bankers' bonus cap

Chancellor George Osborne is picking a fight with the European Union over their plans to limit the amount bankers can receive in bonus payments to a sum no more than 200% of their salary.

Read: What is the EU proposal to cap bankers' bonuses?

Mr Osborne says he is worried about the damage such a cap would do to London's global reputation, and he says the bonus cap may actually have help drive up bankers' wages.

Business Editor Laura Kuenssberg reports.

*Read: Why is George Osborne standing up for bankers' bonuses? *

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What is the EU proposal to cap bankers' bonuses?

The European Parliament have agreed legislation to cap the total sum a banker can be paid in bonuses.

The new regulations are aimed at "stabilising" banking culture, curbing "excessive risk-taking" with a view to make banks "more resistant to crises", according to MEPs.

  • Bonuses will be capped at a year's salary, but a bonus worth 200% of salary can be awarded with the approval of shareholders
  • If more a bonus of more than 100% of salary is awarded, it has to be authorised by holders of half the bank's shares
  • If a bonus of more than 100% of salary is awarded, then a quarter of the whole bonus would be deferred for at least five years in an effort to "encourage bankers to take a long-term view" according to MEPs.

The legislation is due to be implemented into national law by January 2014.

Labour: This government fights for bankers and bonuses

Shadow Chancellor Ed Balls said the legal action taken by Chancellor George Osborne against EU legislation to cap bankers' bonuses told the public everything it needed to know about the current government. Speaking at the Labour conference, he said:

"While we here are saying lets try and get energy prices down for families, lets help families with childcare, lets get get people back to work, David Cameron is sending his Chancellor to Brussels to stand up for bankers and bankers' bonuses."

Read: Miliband urges energy companies to be 'part of the solution'

More: Osborne takes legal action against EU over bonus caps