France and Germany to go ahead with transaction tax despite damning report
France and Germany are preparing to push ahead with a financial transaction tax (FTT), before the European Parliamentary elections in May.
French President Francois Hollande told a joint press conference on Wednesday "We want to wrap up (a deal on) the financial transaction tax, which has united us from the start, before the European elections."
Chancellor Angela Merkel added "progress on financial transactions tax before European elections would be important signal to EU public."
Francois Hollande has been an enthusiastic supporter of the tax but has so far failed to secure a majority of EU support for the move. Only 11 EU countries have signed up to introduce the tax. The US has also remained a staunch opponent of the FTT.
The attempt to breath fresh life into the beleaguered tax comes in the wake of a damning report from London Economics, which contended that such a tax would hammer European savers. The report found that Germany could lose up to €150bn (£128bn) in savings, while Italy would take a beating of €200bn.
The report argued that an FTT would discourage financial activity and would reduce savings over the long-term. Also found that the UK would be far from immune from the effects of the tax. Under the most punitive version of the FTT, British savers could lose up to £3.6bn.
London Economics forecast that Germany, Italy and Spain are set to see consumption reduced by 1.4, 1.2 and 1.6 per cent respectively, should the tax be introduced.