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UK's Cable changes tack on EU FTT bid

Thursday 17 November 2011 - by Will Henley

Vince Cable, the UK business secretary, has laid into European Union plans to introduce a bloc-wide financial transaction tax, in an apparent policy u-turn.

The Liberal Democrat minister branded the European Commission proposal, backed by German chancellor Angela Merkel and French President Nicolas Sarkozy, a "tax on Britain".

On Wednesday evening Cable told Channel 4 News that the UK government would not "fall for" the proposal, which he said was merely designed to raise cash for EU coffers by imposing a charge on London's financial market.

The comments come ahead of talks planned between Merkel and British Prime Minister David Cameron on the thorny issue.

Cable, a former chief economist for energy group Shell, has previously said that the FTT was "an option" and could be adopted if a "critical mass" of European countries swung behind it.

"What the European Union countries are proposing - and Angela Merkel - is a tax which is effectively a tax on Britain, the revenue of which would go to support the EU budget," he told Channel 4 News.

"We are not going to fall for that. It is completely irrelevant to the really urgent needs to sort out the problem of the eurozone. So, of course, we react to that and are critical of that."

In October 2010 Cable, told his party's annual conference in the north of England, that the FTT "remains an option, particularly if the banks decide to splay out lots of money in bonuses and dividends at a time when small businesses are being starved. The case for taking action is a compelling one."

"[You would need] a critical mass of countries - Britain, Germany, Switzerland, France, for example - who can run with this. That would be the way to proceed."

Speaking on Wednesday, the influential Liberal Democrat, who has attracted fierce criticism in the past for attacking financial sector "spivs", maintained that he has "no objection in principle" to a global transaction tax.

The remarks came as European Commission president José Manuel Barroso, setting out a work programme for 2012, said the FTT, among other regulations, would be "critical" to ensuring a European recovery.

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