David Cameron has urged French banks to relocate to London if France presses on with plans to introduce its own financial transactions tax.
French president Nicolas Sarkozy has pledged to introduce a national levy on bank transactions – also known as a ‘Tobin tax’ – if he is re-elected in May to help pay for the economic crisis.
But Cameron said the UK’s door would be open to any French banks who wish to avoid paying the levy by relocating to another country.
The prime minister and chancellor George Osborne have repeatedly insisted FTT could only work if it is applied globally so there is a level playing field across the banking sector. They believe a European-wide levy would just drive banks to trade outside of the EU’s jurisdiction and Britain has refused to take part in such a tax at EU level.
Sarkozy would be “mad” to introduce FTT without even the support of the rest of the EU, Cameron claimed in Davos last week.
Speaking after the summit of the 27 EU leaders in Brussels, Cameron said: “I do think it’s an extraordinary thing to do, when the European Commission itself says that this will cost half a million jobs – when we are fighting for jobs.”
Cameron said the UK would look to take advantage of any move to introduce FTT in France.
“If France goes for it, then the door will be open to many more banks from France, and we would welcome them to the UK,” he said.
Cameron said FTT was not the only way to increase taxes on banks. He said: “We have stamp duty on share dealings, as well as the bank levy – and the point is that unless the Financial Transactions Tax is done everywhere, it simply drives (bank) business to those jurisdictions that don’t have it.”
The prime minister also dismissed Sarkozy’s claim that France had a larger, more thriving industrial sector than Britain. “Well, we have a larger industrial sector than France, but we’ll gloss over that,” explained Cameron.
He continued: “We are rebalancing the economy, seeing the growth of manufacturing technology, pharmaceuticals: there are great British companies in those sectors, and there are great automotive sector investing in Britain, Honda, Toyota, Jaguar, Land Rover.”