A European financial transaction tax would be catastrophic for the continent without the participation of countries such as the United States and China, British finance minister George Osborne said on Monday. European Union policymakers have suggested a tax on financial trading to raise cash for a range of areas from development to bailouts, but Britain has rejected the idea, to safeguard London's position as a global centre of finance.
"Proposals for a Europe-only financial transactions tax are a bullet aimed at the heart of London," Osborne said in article for the London Evening Standard newspaper. "The ideas of a tax on mobile financial transactions that did not include America or China would be economic suicide for Britain and for Europe."
"The EU should be coming forward with new ideas to promote growth, not undermine it." Osborne said there were "more grounds for optimism" this week that the eurozone crisis might stabilise, but warned it was still the "most dangerous moment for the world economy since Lehman Brothers went down in the autumn of 2008". He urged Greece and Italy to show the world they could push through austerity measures and called on the eurozone to dramatically increase the firepower of its own bailout funds.
"The financial risks of standing behind their currency will ultimately be borne by eurozone citizens. The eurozone has the financial capacity to restore stability. They now need to deploy it without delay," he said. Wary of the impact on Britain's economy from a break up of the eurozone, Osborne and Prime Minister David Cameron have strongly backed the idea that the zone needs to integrate economic policy further to strengthen its foundations. "Frankly this is a big loss of national sovereignty for those countries ... But it is the only way to make a currency union work for the long term," Osborne said.