Gah!

To the Europeans who seem to be so determined to push for a pan-European transaction tax to provide funds for the Eurozone, there are just a few points I’d like to make:

1. The UK is not in the Euro. Whilst we have no especial desire to see it collapse, trying to fix the Euros problems by taxing a nation that doesn’t use it is at best disingenuous and, at worst, raises questions about your sanity. Moreover, the UK would be, despite claims to the contrary, disproportionately hit by the tax as London is, for better or worse, the financial services capital of Europe. How would the French like the UK to propose a croissant tax or the Germans feel about a luxury-cars tax? At least these ideas have the merits of taxing the very countries that use the currency.
2. Even if a transactions tax were to be introduced, how precisely would it solve the deeply flawed structure of the Euro / EU? With this additional source of funds bolted on, the EU/Euro would still possess no lender of last resort, no debt mutualisation, no means of preventing governments from ‘simply making up the numbers’ (*cough* Greece, Italy, France *cough*) and inadequate levels of political legitimacy. At best it would buy some time, no more.

If you want to solve the problem then you need to solve the problem yourselves, using only the countries that use the Euro. You need to agree a federal structure (with the whole gamut of pooled political structures that – crucially - are seen to be legitimate & representative whilst also agreeing full debt mutualisation & a federal banking structure), or you need to end this half-baked economic experiment that has condemned large (and growing) swathes of the EU to poverty & extremism.

Just because ideology demands that you ignore economics doesn’t mean that economics is going to ignore your ideology. Just ask the Soviet Union.

S