Dear Mr. Mandelson: please think before writing

The eurozone will introduce a financial transaction tax that will hurt the City and we will be powerless to halt it.

If they introduce a tax on themselves and we do not introduce the same tax on ourselves, how does this hurt us?

Quite. What will actually happen is wehat happened in the 50s and 60s, when the Americans imposed a tax upon dollar financing. The business all moved to London.

What will actually happen with a eurozone only financial transactions tax is that the 20% of Europe\’s wholesale financial markets which are not already in London will move to London.

It\’s actually the best thing that could possibly happen to The City.

By the way, please remember that Peter Mandelson will be in receipt of an EU pensions, one which requires him, if he is to stay eligible for it, not to work against the so called \”interests of the European Union\”.

Bought and sold you might opine.

21 thoughts on “Dear Mr. Mandelson: please think before writing”

  1. It seems to me at least possible that the 26 will reach an agreement re: FTT and present it as a fait accompli to UK as a EU Treaty.

    Which would hurt the City and we would be powerless to stop it just as Meddlesome says. No?

    I would like to be wrong on this one.

  2. I doubt that the 26 will do it by Treaty. Far too many differing opinions and sovereignty issues involved. In which case, it will favour London.

    Damn stupid anyway. They themselves believe that the FTTax is a shot in their own foot. Amazing but true!

    They also have more important short-term worries. The whole thing may be irrelevant by the time they get round to trying to sort it out.

  3. bilbaoboy, it may be a daft idea, but I was left with the impression that most/all of the 26 were in favour. They have differences for sure, but this does not appear to be one of them.

    If that is true (and I’m more than happy to be put right), then a Treaty is not that difficult, and we are screwed.

  4. Mandelson is saying that the EU26 will find a way to override the veto, by deeming the FTT to fall within powers covered by Qualified Majority Voting, or perhaps by using QMV powers to present Britain with an even less attractive alternative.

  5. PaulB – And he may, or may not, be correct.

    I find the line of argument from Labour / the BBC / the Guardian / the Lib Dems / the EU to be fascinating.

    They seem to be saying Cameron can’t stop FTT, so he should have signed up to FTT, to protect our influence in Europe, although clearly our influence was already so weak they wouldn’t give Cameron what he wanted on FTT, so what influence there was to protect isn’t clear.

    It’s like a mugger who scolds his victim for not voluntarily handing over his wallet.

  6. ” They themselves believe that the FTTax is a shot in their own foot. Amazing but true!”

    Not quite. I thought it was that they believe it will cost more in taxes lost to member states, than it raises in taxes to the EU. However, from the EU’s perspective, it is quids in, no?

  7. Paul B. Ah, but your assuming they are a conniving bunch of slimey weasel shitba..oh..erm I think that might be exactly what happens.

  8. “find a way to override the veto, by deeming the FTT to fall within powers covered by Qualified Majority Voting” …. crivens, this could get interesting.

    If the EU nations turn on Britain (perhaps they already attempted an ambush last weekend) we could have some real political action.

    If they are gunning for us I can only suppose it is because the tories are such a comfortable home for europhobes.

    Blair might equally have used the veto given the circumstances, but would the continentals have plotted an ambush against a nominally europhile British govt.

    If we do find ourselves in a big fight the continentals will we back our govt or turn against them? Who knows?

    This could bring down Cameron’s govt, however I think he may have got lucky with where the continentals are choosing to fight – even the Cifers seem to feel that we are being got at by the continentals – if the country feels assalted then Cameron may come out of it very well.

    All so interesting and nobody knows what will happen.

    Of course it may all blow over – Britain is not part of Euroland so we are in fact peripheral to their main concerns, they might be too busy to pick a fight the Brits.

  9. Treaties ARE ‘that difficult’.

    All countries must sign – each government has a veto. It appears some governments are prepared to use theirs…

    Then the parliaments must ratify – some governments may have difficulty getting the deal through their legislatures, particularly if there are rebellious representatives or unstable coalitions. There is also a risk of some national judiciaries ruling ratification unconstitutional if it impinges on legally-protected aspects of sovereignty. Getting constitutions changed is an even harder business than ratification. (If the EU opts for constitutional limits on fiscal policy then all EZ members will have to amend their constitutions – a slow process and plenty that can go wrong.)

    And in some countries it is necessary for a referendum to pass before an EU treaty can be ratified. Ireland could well be a sticking point again. The UK may have to hold a referendum (depends on treaty contents, but if Brussels gets more power over UK tax then hard for politicians to dodge having one even if it’s politically inconvenient) – odds of that passing are likely to be long unless public opinion turns around.

    So no, nobody’s going to accidentally walk into (or be shoved in the path of) an EU treaty. Neither are EU treaties going to happen on the rapid timescale required to handle the Eurozone’s most immediate problems – though there’s a strong case that treaty change is ultimately necessary to sort out long-run issues eg surrounding ECB mandate.

  10. “Ireland could well be a sticking point ” …. Ireland will leave the Euro – they will not agree to stop tax competition etc and the other EZ countries will no longer permit it. The inexorable logic of sharing a currency has been avoided for 10 years, but must now be addressed.

  11. The interplay between EU and member state politicians is fascinating.

    Merkel and Sarkozy support the EU FTT so long as it gives London a kicking but I think they would drop it like a stone if it ever looked likely to happen. They don’t want the EU to be fully operational with Herman van Remploy at the helm and with its own source of revenue. National FTTs rather than a Europe wide one would be a better fudge from their point of view.

    Harmonisation to be good Europeans but without granting Brussels a greater degree of financial independence. By convoluting the recent pantomime of Dave wielding a phantom veto on a non-existent treaty to bravely force Angie and Nicholarse to have to go down the intergovernmental route as opposed to EU treaty route, they have achieved that.

  12. They need to make amendments to the treaty for ERM. Without that by July next year they are dead, and we can veto it. We have the upper hand.

  13. I think there is a reasonable concern that the EU could act in an extra-jurisdictional fashion. Something along the lines of an FTT payable by Eurozone registered companies wherever the trade takes place.

  14. Jono: all that would do is create an incentive for the trading to be done by non-Eurozone registered companies.

  15. Cyclefree: Not if it was linked to passporting rights or done on a consolidated basis – e.g. by domicile of Topco.

  16. If they needed an actual treaty change to do this, they would need an IGC and unanimity, so Cameron could veto it. Whether he would, is still an open question.

    However by far more likely is they’ll find a way to do it via QMV, whereupon we’re shafted.

    The only sure way to avoid it is to leave.

  17. James, I think the pension schemes for workers (as linked in a previous posting’s comment), commissioners and MEPs are different. Whether that makes the detailed Ts&Cs different is another question. I suppose we’ll find out the second Farage resigns or fails to be re-elected.

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