Barnier used an address to the City at Guildhall yesterday to restate his support for a Tobin tax as “feasible” and said its impact on financial services would be “negligible”.
That contrasts to a hardening view in London that the tax would drive be so costly as to prompt some firms to relocate.
Some British economists have suggested that the heavy burden of a Tobin tax imposed outside the UK could actually benefit Britain.
Capital Economics’ Vicky Redwood said that if France or Germany imposed their own tax without the rest of Europe: “The potential boost to the UK’s financial services sector as activity relocates to London could be significant.”
Barnier suggested yesterday that if a tax were introduced across the whole of Europe, it could affect some transactions passing through London.
“It would be levied on the parties to the transaction, at their domicile. Regardless of whether the transaction is carried out in London, Paris, Frankfurt, Amsterdam or anywhere else. No discrimination,” he said.
But such a form of the tax could support the argument for firms to move their domicile to London.
The issue is set to come up in discussions this week in Davos as regulators gather to debate systemic risk. Lord Turner will also raise the issue of regulating “shadow banking” and progress on bank resolution regimes.