Osborne takes legal action against EU over bonus caps

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.

The legal action was lodged on Friday, after it had been approved by the Chancellor.

An HM Treasury spokesman said: "These latest EU rules on bonuses, rushed through without any assessment of their impact, will undermine all of this by pushing bankers' fixed pay up rather than down, which will make banks themselves riskier rather than safer.

"Regulation of pay in this manner goes beyond what is permitted in the EU Treaty. That's why we are challenging these rules in the European Court, to ensure the legislation respects the EU Treaty and actually achieves what it's meant to."