The British Bankers’ Association, Confederation of British Industry and manufacturing trade body EEF are warning the EU’s financial transaction tax could push up mortgage rates while driving down savings rates and pension pots.
In a letter to European Council president Herman Van Rompuy, published today, the trade bodies argue the FTT is a tax on family savings.
On 1 January 2014, 11 EU countries will introduce a 0.1 per cent tax on share and bond transactions and a 0.01 per cent tax on derivative exchanges.
The trade bodies argue the tax being imposed by the countries, including France and Germany, will have a major impact on transactions beyond their borders, including on the UK.
The letter states: “Fixed rate mortgages, gas and electricity, petrol and diesel are all examples of products in daily use where suppliers aim to minimise the effect of wholesale price rises through hedging some of the risks involved. This will become a more costly exercise.
“Ultimately the FTT is not just a tax on businesses and financial markets but also a tax on family savings. The proposed FTT will result in lower interest rates on savings products and pension funds will face rising costs which will mean that people will get less money when they retire.”
The letter points to research from BlackRock showing the tax could cost pensioners nearly £13,000 over 20 years.
It calls for a new impact assessment for the tax to include the effect on households, businesses and financial stability.