TheCityUK: Comment on European financial transaction tax

18 August 2011

TheCityUK reports that a transaction tax would threaten the competitiveness of not just the UK, but of the EU. It would provide the catalyst for trading firms to move away from the EU to other jurisdictions where this tax is not imposed.

For the UK, a European transaction tax on financial trades would be especially damaging. London has long been the global capital of many trading activities – for instance London has 37 per cent of global FX trading, 46 per cent of global interest rate OTC derivatives trading, 19 per cent of foreign equities trading. That lead would be truly challenged were the tax imposed – regulation must be thought through in order to preserve this leading global position. 

By its very nature, regulation on a G20 basis facilitates common global standards; where regulation is implemented on a European basis the regulators must ensure there is no impact on the competitiveness of the region – otherwise they risk damaging jobs and growth in the region.

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