THE European Union says it will press ahead with its own banking levy after the world’s top economies failed to agree on taxing an industry seen as a main culprit behind the global economic meltdown.
Finance ministers finished talks yesterday to tackle bloated public debts with a promise to find a way of taxing banks more, days after a meeting of the Group of 20 countries ditched such an idea.
“The G20 was a setback. But not for Europe. We still want this and will continue to advocate it – the sooner the better,” said Austrian finance minister Josef Proell.
German deputy finance minister Joerg Asmussen warned of growing impatience among voters at a lack of progress in calling bankers to heel after the crisis. “Over and above the bank levy, we should introduce a financial transaction tax. We will try to reach a global consensus but if that is not possible, we ... should move forward in Europe.”
The EU’s plans came as Germany was yesterday accused of “misleading” other European Union countries by using unusual arithmetic to pledge €80bn (£66.5bn) of headline-grabbing austerity cuts yesterday.
Berlin said it would shave the figure from public spending by 2014 to set an example to heavily indebted neighbours such as Greece and Portugal. After a meeting of the 27 EU finance ministers, chancellor Angela Merkel said the “unique effort” would include up to 15,000 job losses in Germany’s public sector.
But analysts at Fortis Bank said Germany was using peculiar accounting, factoring in reductions in borrowing each year that would come as a consequence of modest cuts, to arrive at the €80bn figure. For example, a first tranche of €11bn of cuts in 2011 appeared to have been re-counted each year on the basis of a lower borrowing requirement to give a total cut of €44bn over four years.
Nick Kounis, chief economist at Fortis, told City A.M.: “€80bn is a misleading number. Because they measure the increase in debt cumulatively that would have occurred if they had not put this into place over a number of years, it’s not only double counting but triple counting.”