European Parliament aims financial arrow through the heart of the City
Little people with little ideas have once again aimed a financial arrow through the heart of the City without realising the consequences
The joys of being on the gravy train is that you can vote through any old saw without a care about how it affects the ordinary member of the public, or the economy, or minor issues such as tax sovereignty.
Once again, those little people in the European parliament have demonstrated the economic understanding of a newt in voting through the financial transaction tax (FTT) by 487 to 152 votes with 86 abstentions.
There is only so many times you can hit your head against the wall without serious brain damage and I really would like to keep the faculties I still possess, but here we go…
What part of arranging deckchairs on the titanic are they failing to understand? Here we are facing Greek ruin and what is their brilliant idea? To put further costs into the market – further costs that could leave the EU with a €116bn (£95bn) hole in the region's public finances, according to a report by accountants Ernst & Young.
Even better, a tax that had a residency principle, which a House of Lords Committee called “impractical and unworkable”, which would lead to “a significant risk that financial institutions would relocate outside the EU if an FTT is introduced".
With some honourable exceptions, the EU and its constructs, such as the parliament, appear to be filled with little people, with little ideas; in fact, with little idea about the rule of consequence – no wonder the Lib Dems are so keen on it.
The proposal actually tightens what the EC put forward. Yep, let’s make it even worse for Europe.
Firstly, it has added an "issuance principle", whereby financial institutions located outside the EU would also be obliged to pay the FTT if they traded securities originally issued within the EU. To take their example, if Siemens shares are traded between a Hong Kong institution and one in the US, they will have to pay the FTT because the shares were originally issued in Germany.
And they think that is a good idea? Why should a Hong Kong or US participant bother with Siemens? There are enough none-FTT zoned shares to trade with. And also, what would happen if Siemens, say, delisted and went to New York/
And of course there is that small matter of the City.
Their Lordships’ report said the EC proposals would place the City of London under severe threat and, "given the strategic importance of the City of London, such relocation would have a highly damaging impact not only for the UK but on the economic health of the EU as a whole. A proposal that would have such a disproportionate impact on the UK above all other Member States makes the Commission’s proposals particularly unacceptable".
By the EC’s own estimates, around 90 percent of derivative trades would leave the EU. And with London making up 80 percent of that market, guess who pays the price?
Speaking of price, the MEPs in their generosity say that pension funds will not have to pay the FTT. Aside from how exactly this is practical, what about knock on costs? How will they be offset?
As I have written before, for you, in the street, the cost would be priced in so you will see higher fees or mortgage rates and leaving you between 2.73 percent and 5.46 percent worse off according to TheCityUk’s research.
Not to worry, you will hear David Cameron say. We have a veto. Didn’t I use it last year?
Not if MEPs have their way. There is something either worrying or farcical - I am in two minds which – over Rapporteur Anni Podimata (S&D, EL) warning that the EU “cannot be held hostage by a handful of Member States”.
I’m sorry, but how exactly is trying to prevent you fools from shooting yourselves in the foot, holding you hostage?
How many times does it have to be said until you get it? An FTT is idiocy. It is playground Marxism disguised as a way of “protecting Europe”.
The movement for an FTT came from a Franco-led idea that somehow the Anglo-Saxon market was targeting the euro for the sake of it. Nope. Traders that acted like that would soon be fired…and poor. Traders look at the euro-mess and act accordingly.
Never mind, we have got our veto according to Cameron but contained in the ‘opinion’ is two things that could see the door open in the UK.
What “measures” will be taken to prevent the single market being undermined by a limited adoption of the FTT among member states – i.e. refusal by the UK and Sweden? We know that the UK want the Single Markets Act to be fully enacted in services and technology. So what will that payoff be, Cameron?
In addition, in its generosity, the EC said that the money raised through the tax could be knocked off a country’s contributions. Now, aside from the fact I doubt this hypothecation would really exist, what’s the bet that this would be sold to us as a reduction in our EU contributions, no matter the real cost to our economy?
Everyone is talking about a Grexit right now, but this ridiculous, factually-counteractive dogma could bring ruin to us in the UK. Maybe it is time for us to talk about exit?
We are wholly dependent on the kindness of our readers for our continued work. We thank you in advance for any support you can offer.