Britain ceases legal challenge

Great Britain abandoned its legal challenge to a European Union cap on bankers' bonuses on Thursday, following an earlier recommendation by an advisor to the bloc's top court that the appeal be rejected.

"I'm not going to spend taxpayers' money on a legal challenge now unlikely to succeed," Finance Minister George Osborne said in a statement. "These rules may be legal but they are entirely self-defeating, so we need to find another way to end rewards for failure in our banks."

The financial sector plays a key role in the British economy, and London enjoys its status of Europe's leading banking hub.

The conservative government of Prime Minister David Cameron had opposed the EU's directive forbidding excessive salaries out of fear that such a rule could tarnish the country's status as a major financial center.

Britain had taken the case to the European Court of Justice in Luxembourg, where on Thursday an advisor to the court submitted a legal opinion in support of the EU's bonus cap. While such opinions are not legally binding, the court usually follows such recommendations.

It was the latest dent in relations between London and Brussels and came at a time when Cameron was facing a swell in euroskeptic sentiment at home. Cameron has already promised to hold a referendum on Britain's membership in the EU in 2017, if he is reelected this spring.

cjc/hg (Reuters, AFP)