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| Version 5 | Version 6 |
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| European Commission financial tax opposed by UK | European Commission financial tax opposed by UK |
| (40 minutes later) | |
| Bank shares have fallen in London after the UK said it would "resist" a financial transaction tax on EU members proposed by the European Commission. | |
| The tax would raise about 57bn euros ($78bn; £50bn) a year and would come into effect at the start of 2014. | The tax would raise about 57bn euros ($78bn; £50bn) a year and would come into effect at the start of 2014. |
| At close, Royal Bank of Scotland was behind by 3.64%, Lloyds Banking Group by 2.4%, and Barclays by 1.31%. | |
| London would be hardest hit by the tax as the majority of banking transactions in Europe come through the city. | |
| City of London officials have said that about 80% of the revenues of any Europe-wide financial tax would come from London. | |
| Under the proposals, the financial tax would be levied at a rate of 0.1% on all transactions between institutions when at least one party is based in the EU. Derivative contracts would be taxed at a rate of 0.01%. | |
| The BBC's business editor Robert Peston said that while dealers and investors in financial products such as derivatives and bonds were not happy about the proposal, share dealers were more relaxed as the tax would cost less then the existing stamp duty, which the tax would replace. | |
| Meanwhile, in Germany and France bank shares also fell at close, and the European Banking Federation called the tax a "nonsense". | |
| Among the market losers were Deutsche Bank and Commerzbank in Germany, and Societe Generale and BNP Paribas in France. | |
| 'Contribution' | |
| Despite the opposition Algirdas Semeta, EC commissioner for taxation, customs, anti-fraud and audit, said: "Our project is sound and workable. I have no doubt this tax can deliver what EU citizens expect - a fair contribution from the financial sector." | |
| Germany and France have been among countries pressing the European Commission to propose the tax on all financial investment systems, as they seek to show their citizens they are serious about recouping some of the costs of the banking crisis. | |
| Austria, Belgium, Norway and Spain also support such a tax. | |
| Earlier, Commission president Jose Manuel Barroso had said banks must "make a contribution" as Europe faced its "greatest challenge". | |
| A transaction tax would need the approval of the UK in order to be implemented across the EU. | A transaction tax would need the approval of the UK in order to be implemented across the EU. |
| The commission said that if the UK vetoed the tax, it would look to implement it in the eurozone. | The commission said that if the UK vetoed the tax, it would look to implement it in the eurozone. |
| Referring to "the constraints of unanimity", Mr Barroso said "further changes to the Treaty of Lisbon" may be required in order to push through measures to stabilise Europe's economy. | Referring to "the constraints of unanimity", Mr Barroso said "further changes to the Treaty of Lisbon" may be required in order to push through measures to stabilise Europe's economy. |
| 'Additional revenue' | |
| The commission said the tax was "to ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the member states". | The commission said the tax was "to ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the member states". |
| Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule. Glossary in full | |
| It said financial firms had played a role in the current "economic crisis" and was "under-taxed" compared with other sectors. | It said financial firms had played a role in the current "economic crisis" and was "under-taxed" compared with other sectors. |
| The "significant additional revenue" raised would contribute to public finances, it added. | The "significant additional revenue" raised would contribute to public finances, it added. |
| A spokesperson for the UK Treasury said it would "absolutely resist" any tax that was not introduced globally. | A spokesperson for the UK Treasury said it would "absolutely resist" any tax that was not introduced globally. |
| "We would not do anything that is not in the UK's interests," he told the BBC. | "We would not do anything that is not in the UK's interests," he told the BBC. |
| The Treasury has said there are also a number of practical issues that need to be worked through. | |
| But South East England MEP Daniel Hannan was more outspoken about the proposal. | |
| The Conservative politician said: "We are going to be stuck with the bill to prop up a currency [the euro] that we declined to join." | |
| Earlier, in his annual State of the Union address in Strasbourg, Mr Barroso had called not only for the transaction tax but for eurozone members to issue debt collectively, through so-called eurobonds. | |
| "Once the euro area is fully equipped with the instruments necessary to ensure both integration and discipline, the issuance of joint debt will be seen as a natural and advantageous step for all," he said. | "Once the euro area is fully equipped with the instruments necessary to ensure both integration and discipline, the issuance of joint debt will be seen as a natural and advantageous step for all," he said. |
| Mr Barroso also dismissed speculation that Greece may be forced to leave the euro if it defaulted on its debts. | Mr Barroso also dismissed speculation that Greece may be forced to leave the euro if it defaulted on its debts. |
| "Greece is, and Greece will remain, a member of the euro area," he said. | "Greece is, and Greece will remain, a member of the euro area," he said. |
| Further austerity | Further austerity |
| Officials from the commission, along with those from the European Central Bank and International Monetary Fund, are due to begin reviewing Greece's attempts to reduce its debt levels on Thursday. | Officials from the commission, along with those from the European Central Bank and International Monetary Fund, are due to begin reviewing Greece's attempts to reduce its debt levels on Thursday. |
| They will then decide whether to release about 8bn euros from a 110bn bailout package agreed last summer, money the Greek government badly needs in order to pay its bills. | They will then decide whether to release about 8bn euros from a 110bn bailout package agreed last summer, money the Greek government badly needs in order to pay its bills. |
| A key obstacle to the payment was removed on Tuesday when the Greek parliament passed a controversial new property tax bill that aims to boost revenues. | A key obstacle to the payment was removed on Tuesday when the Greek parliament passed a controversial new property tax bill that aims to boost revenues. |
| Eurozone members are in the process of ratifying proposals put forward in July, one of which would see private lenders writing off about 20% of their loans to Greece. | Eurozone members are in the process of ratifying proposals put forward in July, one of which would see private lenders writing off about 20% of their loans to Greece. |
| The proposals also included expanding the powers of the eurozone bailout fund. Finland approved the plan on Wednesday, while Germany will vote on it on Thursday. | The proposals also included expanding the powers of the eurozone bailout fund. Finland approved the plan on Wednesday, while Germany will vote on it on Thursday. |
| Greek write-off | Greek write-off |
| There has been renewed optimism this week that eurozone leaders may finally be ready to take decisive action to tackle the debt crisis. | There has been renewed optimism this week that eurozone leaders may finally be ready to take decisive action to tackle the debt crisis. |
| G20 leaders met over the weekend to discuss the best way forward, but EU officials stressed that no grand plan of action had been agreed. | G20 leaders met over the weekend to discuss the best way forward, but EU officials stressed that no grand plan of action had been agreed. |
| A number of ideas were reportedly discussed, including a 50% write-down of Greece's government debts. | A number of ideas were reportedly discussed, including a 50% write-down of Greece's government debts. |
| Other proposals included strengthening big European banks that could be hit by any defaults by highly indebted governments, and boosting the size of the eurozone bailout fund. | Other proposals included strengthening big European banks that could be hit by any defaults by highly indebted governments, and boosting the size of the eurozone bailout fund. |
| These helped to boost investor sentiment with stock markets rising sharply on Tuesday, although Asian and European markets were largely flat on Wednesday. | These helped to boost investor sentiment with stock markets rising sharply on Tuesday, although Asian and European markets were largely flat on Wednesday. |
| However, markets remain highly volatile, with investors remaining sceptical of policymakers' ability to solve the crisis quickly. | However, markets remain highly volatile, with investors remaining sceptical of policymakers' ability to solve the crisis quickly. |
| "Every time the market gets its hopes up that a solution to the eurozone crisis is near, the rug gets pulled from under it," said Ben Potter at IG Markets. | "Every time the market gets its hopes up that a solution to the eurozone crisis is near, the rug gets pulled from under it," said Ben Potter at IG Markets. |
| "Only when we see firm action being taken, rather than hollow promises, will confidence and sentiment begin to improve." | "Only when we see firm action being taken, rather than hollow promises, will confidence and sentiment begin to improve." |