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EU treaty letter calls for common framework on financial regulation

France and Germany are pushing for changes to the EU treaty which would see EU member states subject to the same financial regulation and the creation of a financial transaction tax.

A joint letter to the European Council president Herman Van Rompuy from French President Nicolas Sarkozy and German Chancellor Angela Merkel sets out more details on the treaty change they would like to see to address fears overs the eurozone debt crisis.

Sarkozy and Merkel agreed broadly to EU treaty change earlier this week.

An English translation of the letter, published on Reuters today,  says there should be more “binding and more ambitious rules and commitments for the Euro area member states”. The letter goes on to say that France and Germany will work to introduce the agreement across the EU “as soon as possible”.

Sarkozy and Merkel write there needs to be “greater convergence of economic policies at least amongst Euro area member states”.

The letter calls for a “new common legal framework” for areas such as financial regulation, and the creation of a financial transaction tax. Other areas include labour markets and growth policies.

It also proposes there should be “automatic consequences” when member states breach a 3 per cent deficit of GDP.

Prime Minister David Cameron has said he will not sign any new EU treaty without safeguards to protect the UK’s interests and those of the UK financial sector.

In last month’s autumn statement, Chancellor George Osborne defended the Government’s decision to reject the European Commission’s proposal for a financial transaction tax, saying it would be a tax on individual savers not banks. He said the tax must be rejected to ensure the UK remains at the centre of the global financial system.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Let us look at the position we would be placed in as an industry if a “financial transaction tax” was levied.

    Is it a bad thing ?

    What is the proposed level of tax rate to be applied?

    Where would the tax collected reside?

    What could it be used for ?

    Would we be able to do away with the FOS and FSCS schemes as investors who lost money could claim from that fund ?

    Could we do away with the need to take out PI insurance ?

    As all advice is going to be fee based after 2012, if a transaction goes awry, is there any ongoing liability for the adviser if a product failes to perform ?

    Start the debate, let’s see what comes out of it.

    If we are in the EU, we need to be in it to win it, if we are going to sit on the sidelines, then let’s get out now and be an Independent Nation once more, free and unincumbered by EU directives and legislation.

    It is clear that if we left the EU we could still trade with its members so what’s the problem?

    I think anyone who answers will need a big postcard!

    Freedom for the United Kingdom !

  2. Why do Germany and France want a slice of what happens in the City of London? Answer: To prop up the Eurozone.

  3. The tax was going to go to the European Central bank as a reserve fund to assist EU countries in trouble.
    This proposed tax was estimated to be able to generate 50billion Euros a year. As the UK accunts for 80% of the financial transactions in Europe, that would mean 40bn Euros or roughly £33 bn that would leave the UK and go to paying others who have not managed their economies.
    It has been the continued bail outs to the likes of Greece that have allowed them to keep wasting money.
    Time for other countries to resolve their own problems and if that means us getting out of the EU, great. It is costing us £28.1 million a day just to belong to that club of spongers.
    We could do so much with that extra money being available here in Britain.

  4. As Justin Urquart-Stewart pointed out on BBC news this morning, the UK already has an FTT, in the form of Stamp Duty. Even if the UK were to replace Stamp Duty with the Euro FTT, it would probably be more and, more significantly, it would be lost to the UK Exchequer so, as far as I’m concerned, Cameron was quite right to have rejected it.

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