France offers tax breaks to woo UK banks

THE government is facing calls to head off attempts by France and Germany to lure the world’s biggest investment banks away from London by offering them lucrative tax breaks.

The British Bankers’ Association (BBA) urged ministers to delay launching new rules on pay, bonuses and banks’ capital holdings until other nations do the same.

The BBA says the government’s tendency to impose new rules before other countries is risking an exodus of major firms to Paris and Frankfurt.

It emerged yesterday that France and Germany are offering 20-year tax breaks to banks to relocate.

French president Nicolas Sarkozy is thought to have raised the issue in private meetings with the European heads of major financial institutions.

The BBA said it accepted the need for new safeguards to prevent another financial crisis, although it should be done in line with global accords.

BBA spokeswoman Angela Knight said: “The UK must continue to implement international agreements, but it needs to do it on the same timescale and in the same way as other countries – otherwise we’re giving the opportunity to other countries to take business, tax revenues and jobs away from us.”