The Euro, the EU and the Case for a Financial Transaction Tax

by David Purdy

It was reported on this evening’s news bulletin that the Franco-German plan for greater fiscal integration in the eurozone includes a proposal for the introduction – within the 17-member eurozone, not the 27-member EU – of a financial transactions tax (FTT). In one sense, this will suit Cameron since it will help him head off pressure from right-wing Tory rebels for a referendum on Britain’s membership of the EU. However, if the eurozone leaders accept it at the summit meeting being held over the next two days, opponents of the Con-Lib coalition will acquire a golden opportunity to press the case for introducing an FTT here too, whatever they might think about the euro and the deflationary and anti-democratic aspects of the Franco-German plan for rescuing it.

This opportunity should not be missed. It offers a chance to unite a broad cross-party and popular alliance against the City of London and its malign influence over British economic policy, to drive a wedge between the Tories and the Lib-Dems, and to challenge the Labour Party (and, for that matter, the SNP) to show where they really stand on the future of Britain’s financial services sector.

It is worth recalling that even the Tory leadership is not opposed to the idea of an FTT in principle. But to protect the sectional interests of the City, they insist that they would support an FTT only if it were introduced simultaneously in every major financial centre in the world, a condition that would be extremely difficult, if not impossible to meet. The only major occasion when most of the world’s leading states acted in this degree of unison was when the United Nations was established in San Francisco towards the end of the Second World War, and even in that case the “United Nations” was a euphemism for the wartime allies, which naturally excluded the remaining Axis powers, Germany and Japan. (In 1943, following the allied landings in Sicily and the fall of Mussolini, Italy switched sides, was occupied by the Wehrmacht and became a major theatre of war).

The whole point of getting agreement in principle to an FTT, first within the eurozone and then within the EU as a whole, would be raise the issue at the G20 and other relevant international forums, including the UN, with a view to one day bringing the US on board. To this end, it might be advisable for the European governments, whether the 17 or the 27, to delay implementation, so as to keep the issue in play on the global stage.

One practical way of building momentum behind the campaign for an FTT in the UK would be to get 100,000 people to sign an e-petition requesting that the issue be discussed in the House of Commons. I imagine that this would not be too difficult to achieve, even taking into account the sadly diminished state of the British left. Does anyone know how you set about launching such a petition?

Another way forward would be to press the Labour Party and the other opposition parties at Westminster to table a suitable amendment when the government seeks parliamentary approval for whatever agreement is reached by the EU summit over the next two days. We’ll have to wait and see what happens, but at the moment it looks as if Merkel and Sarkozy have sunk their differences over the euro and reached a compromise which will be accepted – certainly by their fellow heads of government and state within the eurozone, and probably by all 27 EU leaders. If so, the wave of europhobia currently agitating the Tory right and much of the media will founder on the rocks of realpolitik.