Banks and financial institutions endured a painful day’s trading, following Angela Merkel and Nicolas Sarkozy’s announcement yesterday that the Eurozone should adopt
a ‘Tobin tax’, a charge on financial transactions.
Once again, M&S chose piecemeal changes over the grand structural scheme desired by markets. The Tobin tax was just one proposal of three. The other two were: to create “genuine economic governance of the Eurozone” under, for the moment, EU President Herbert van Rompuy. The second: to impose a ‘Golden Rule’ on the budgets of Eurozone members. The ‘Golden Rule’ will bind national parliaments to agree to limits on national debt levels and impose statutory requirements on mastering budget deficits. The two nations also pledged to harmonise corporation tax in their jurisdictions.
Most of these proposals, which unquestionably set the region on the path to integration in the future, were contained in March’s ‘Pact for the Euro’, another Franco-German affair.
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