The story being briefed out of the year’s first Franco-German Summit is that President Nicolas Sarkozy won the backing of Chancellor Angela Merkel for a tax on financial transactions, a levy that the British government objects to and that Ernst and Young say would leave a €116bn hole in Europe’s public finances.
But before the City begins building barricades and the PM puts on his bulldog mask, it is worth taking another look at the news from Berlin. For no sooner had the agreement been announced than the
tax was rejected by Chancellor Merkel’s junior coalition partner, the
pro-business Free Democrats, who say they will only back a Europe-wide tax scheme. They are not alone. The Netherlands and Ireland feel the same. And as an EU-wide tax has no chance of succeeding,
given British and Swedish opposition, the whole story is more a matter of French electoral spin than European fiscal policy.
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