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PM plea for global banking action

Prime Minister Gordon Brown has reinforced his support for a global Tobin tax on financial institutions.

In August, FSA chairman Lord Turner put forward plans to introduce a new tax on financial transactions in the City, which would cut bank profits and the assets available for bonuses.

At the Confederation of British Industry conference in London on Monday, Brown said whatever measures are introduced to protect the public will need to be international. He said: “Not just in Britain, but internationally, we need to rebuild trust between banks and the societies they serve.

“But whether it is protection against failure, or changing the balance of risk and reward between the financial sector and the public, and whether it is the protection of the public through contingent capital or resolution arrangements or insurance or a global financial levy, the only action that will work is global action. Action taken together by all the major economies.”

Liberal Democrat leader Nick Clegg argued for a temporary levy of 10 per cent on bank profits in the UK. He told delegates that until retail and investment banking are separated, banks will remain the “beneficiaries of a unique, open-ended guarantee against failure from the taxpayer”.

He said: “I believe they should have to pay for that guarantee. That is why last week, we proposed a new, temporary banking levy of 10 per cent on the profits of the banks until such time as they can be split up.”

Also speaking at the conference was Conservative leader David Cameron, who reiterated Tory calls for Government action to stop retail banks paying out profits in significant cash bonuses this Christmas.

He said: “We have said this cash should be put on to banks’ balance sheets explicitly to support new lending and we would also undertake longer-term reform of our banking system to help stop this crisis from happening again.”

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