A senior legal advisor at the European court of justice has rejected a claim by the British government that an EU law capping bankers’ bonuses is illegal.

Niilo Jääskinen, one of the ECJ’s advocate generals, has recommended upholding the EU law on bankers’ bonuses that restricts payouts to 100% of a bankers’ salary, or 200% if shareholders grant their approval.

Although his opinion is not binding and a final verdict will not be published until next year, the judgement is a blow to the chancellor George Osborne, who has been trying to overturn the EU bankers’ bonus cap.

The Treasury has argued that the EU overstepped its remit by legislating on bankers’ bonuses and imposed the law in a rushed way without any assessment of its impact. Jääskinen dismissed all the UK’s arguments in an opinion that said European regulators had the legal authority to introduce the cap and had not infringed UK sovereignty. He also argued that it was wrong to characterise the bonus restrictions as a cap on pay, because basic salaries were not fixed.

A Treasury spokesperson said on Thursday that the government was considering the opinion and its implications in detail.

A final judgment from the court is expected by early February, just as thousands of bankers in the City are waiting to hear how much their bonus cheques will be worth.

Many legal experts think the court will follow today’s opinion, leaving the bonus cap in place.

“It seems unlikely now that the court will overturn the advocate general’s opinion, so banks should continue planning on the basis that the bonus cap will still be in force next year,” said Tom Gosling, head of PwC’s reward practice.

Jake Green, a senior associate at Ashurst, said although the advocate general’s conclusion was expected, the forcefulness of his arguments came as a surprise. “It seems so thoroughly reasoned and absolute in its conclusions and perhaps that is the surprise. There is no fence-sitting on any of the issues.”

Since the bonus cap was introduced, banks have sought to get around the restrictions by paying their top staff special cash allowances, which are not categorised as basic pay or bonus. But last month, the top European banking regulator warned banks against paying senior staff top-up payments to get round the bonus cap. The European Banking Authority said the payouts were breaching the bonus cap and should be stopped.

Green said banks were under increasing pressure to stop these top-up payments, meaning that their “campaign of organised disobedience” against bonus caps could be drawing to an end. “At some point, something has got to give, you can’t just keep pushing.”

UK regulators have expressed frustration that the EU bonus cap has the unintended effect of limiting the scope for cutting back bankers’ fixed pay. Speaking earlier this week after banks received £2.6bn fines for rigging foreign exchange rates, the governor of the Bank of England, Mark Carney, warned bankers they could see their pay docked, as well as forfeiting their bonus, for bad behaviour.