Brussels claims there is no credit crunch

Tim Wallace
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EUROPE’S planned financial transactions tax (FTT) should go ahead even though it will hit businesses’ borrowing costs because there is no credit crunch, the European Commission (EC) claimed in documents leaked yesterday.

Despite a huge drive from the European Central Bank to improve credit conditions for firms, the EC has said it is happy to hit lending.

“With respect to access to finance for enterprises of the non-financial economy the Commission is not aware of any kind of credit crunch exercised by the financial sector,” it claimed in a document responding to governments’ worries the FTT will harm their economies.

The document, published yesterday by OpenEurope, also claimed it does not matter if the tax increases states’ borrowing costs as the governments will gain revenue.

And the officials refused to exempt pension funds from the charge, arguing they already benefit from a range of other tax breaks and so can afford this extra burden.

“It surely cannot argue that given the state of the economy, now is the best time to implement the tax,” said OpenEurope. “With widespread talk of the FTT being shelved for at least another year, perhaps it is time for the EC to just admit defeat.”