Businesses fear finance tax will hurt every part of the economy

Tim Wallace
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MANUFACTURING and finance firms united today to demand the EU stops plans for a financial transactions tax FTT.

The charge will hit jobs, slow the economic recovery, hit employment and damage small firms, the Confederation of British Industry (CBI), manufacturing group EEF and the British Bankers’ Association (BBA) said in a letter to Herman van Rompuy.

“At a time when we should be completely focused on economic growth and creating new jobs, this tax could have the opposite effect by increasing the cost to businesses of raising funds, making it harder for them to expand in the future,” the letter said. “In particular, the FTT would make it more difficult for small businesses to access the funding they need as they are more reliant on bank borrowing to finance future growth.”

Eleven EU countries want to implement the tax to hit bankers and financiers to make them pay for the financial crisis. But the business groups fear the cost will only end up hitting customers like pensioners and families through lower interest rates and small businesses through more expensive hedging products. The letter points to Blackrock research indicating an individual saving for a pension over a 20 year period would lose up to €15,000 (£12,843) to the tax.