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Cameron denounces 'mad' tax in Europe

Britain's PM David Cameron brands planned transaction tax 'mad' and describes eurozone as 'uncompetitive' ahead of next week's EU summit

AFP , Thursday 26 Jan 2012
Cameron
British Prime Minister David Cameron, speaks during a session at the World Economic Forum in Davos, Switzerland, Thursday, Jan. 26, 2012. (Photo:AP)
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The leaders of Germany, France and Italy will hold a brief meeting just before next week's EU summit to coordinate positions, a high-ranking German source said on Thursday.

The meeting between Chancellor Angela Merkel, President Nicolas Sarkozy and Prime Minister Mario Monti would last around 30 minutes and focus on the main topics of the summit – boosting jobs and growth in Europe – the source said.

The source, who spoke on condition of anonymity, said that the hot-button topics of Greece's problems and the funding of the EU's future rescue fund, the European Stability Mechanism (ESM), were unlikely to feature.

"The topics will be the topics that are being discussed at the summit," said the source, noting that neither Greece nor the ESM were mentioned in the letter of invitation to leaders sent by EU President Herman Van Rompuy.

He said it was unlikely that a crunch report on Greece by its international creditors would be available before the summit takes place in Brussels on Monday.

"My expectation today is that it will not be far enough along that the heads of states and government will be able to talk about it," said the source.

As for the funding of the ESM, he noted that finance ministers had already concluded talks on a treaty concerning the bailout pot and that the focus was now on getting the mechanism functioning.

He noted there was an ongoing discussion over whether the 80 billion euros ($105 billion) should be paid in quicker than the currently-planned five tranches and reiterated that Germany's position was "more flexible than most."

However, this too was unlikely to loom large at the summit, he said.

Instead leaders would focus on discussing economic reforms to boost Europe's long-term growth potential, he said, with particular emphasis on youth unemployment.

"We need sustainable growth in Europe and so there is no alternative to structural reforms," said the source.

In a similar context, Britain's Prime Minister David Cameron launched a stinging attack on his European partners Thursday, slamming the eurozone as uncompetitive and branding a planned transaction tax "madness."

The British premier took the stage on the second day of the World Economic Forum in Davos, the annual get-together for the global business elite, and revived his simmering feud with the ailing single-currency bloc.

In a speech destined to delight his own eurosceptic party back home, Cameron scornfully dismissed French-led plans to introduce a tax on all financial trades.

"Even to be considering this at a time when we are struggling to get our economies growing is quite simply madness," he declared.

"Of course it's right that the financial sector should pay their share. In the UK we are doing exactly that through our bank levies and stamp duty on shares. And these are options which other countries can adopt."

"But look at the European Commission's own original analysis," he added.

"That showed a Financial Transactions Tax could reduce the GDP of the EU by 200 billion euros, cost nearly 500,000 jobs and force as much as 90 per cent of some markets away from the EU."

He echoed a call made on the same stage Wednesday by Merkel for more measures to boost growth but went further, calling for a root-and-branch reform of how the eurozone is managed.

"Now, I'm not one of those people who think that single currencies can never work," he insisted. "But there a number of features common to all successful currency unions."

Cameron said a shared currency must be backed with a central bank ready to act as a lender of last resort, deep economic integration between member states and a system of fiscal transfers to offset imbalances.

"Currently, it's not that the eurozone doesn't have all of these – it's that it doesn't really have any of these," he declared.

In December, Sarkozy reportedly snapped that – as Britain is not part of the single currency –Cameron should shut up about its affairs.

Instead, the British leader listed the measures he would take if he were seeking to tackle the debt crisis – quickly oversee a Greek debt writedown, recapitalise banks and set up a financial firewall to protect states.

"That's what would make the clear difference in sentiment and outlook," he said, in a clear rebuke to Merkel's cautious strategy of incremental reform and her ruling out of pooling eurozone sovereign debt.

While the opening day of debates in Davos focused largely on the crisis of Western capitalism, many of Thursday's sessions took a closer look at the challenges facing individual regions.

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