George Osborne will have a first chance to challenge plans in Brussels to cap bankers' bonuses at a meeting on Tuesday, but his EU counterparts played down his chances of watering down a measure popular with voters.
European Union diplomats and the bloc's parliament agreed new rules last week that would prevent bankers from receiving bonuses bigger than their base salaries from next year. The bonus cap can rise to twice the size of the salary if shareholders agree.
Osborne has argued against the limits and will repeat those objections at an EU ministers' meeting in Brussels but few other countries, however, support his position and Eurogroup Chairman and Dutch Finance Minister Jeroen Dijsselbloem said his country supported the law and would even go further.
Britain's powerful financial sector fears the rules will put London at a disadvantage and provoke an exodus of major banks and staff to rival financial centres. But since the measures only require a weighted majority of member states to become law, Britain has no veto and Michael Noonan, the Finance Minister for Ireland, which as current holder of the EU presidency negotiated the deal with the European Parliament, played down Britain's hope of renegotiating the deal.
"British authorities had problems with the bankers' bonuses issue. There is very little further we can do for them because we pushed the negotiations to quite a degree and we got the best possible compromise with the parliament. So there isn't any more room left really," he said.
Austria's finance minister Maria Fekter said the deal had strong backing among EU members and would have a positive effect on the banks.
An inability to fend off the reform, the first of its kind globally, also underscores Britain's waning influence in the EU and plays to a growing eurosceptic complaint that Brussels has too much say on domestic policy.
Perhaps the best that Osborne can hope for is that if other parts of the wider bank capital agreement are challenged, he could push back for a softening of pay curbs.
In that event, Britain could try to push to change the scope of the rules, which will apply to all EU bank staff globally regardless of where they are based, or propose extra flexibility on how bonuses are calculated.
Presented by Adam Justice