European Union finance ministers met yesterday at which they agreed on a budget for 2015 but one thing they did not reach agreement on was the broad outline of a controversial financial transaction tax.
Eleven member states were hoping to have the "Robin Hood tax" in place by January 2016, but that now looks unlikely.
Peter Brown, Founder of the Institute of Financial Trading, said the FTT was first muted as a way of raising money to fight AIDS in the 1970s. "In its current form, it is anticipated that it would be used as a tax on foreign exchange, among other transactions, within the euro zone banking system in order to raise a rainy day fund to bail out banks in the future," he explained. However, the chink in the armour is that a number of countries, led principally by the UK, are against the tax. "If it was introduced without the UK on board, all the transactions would simply move to London. The concept of trying to charge for financial transactions and raise money in various centres simply won't work," he said.
Peter Brown said that the tax was viewed by many as a means of raising money by any means other than austerity. Of more immediate concern to the finance ministers, however, is the situation in Greece, where the threat of a general election is having a negative impact on global markets. "There are a few things upsetting markets right now. There's a banking crisis in China and a general slowdown in the economy. Greece is back on the agenda, although it never really went off the agenda," he said. "It has €240 billion of debt which they can't repay. It's only a matter of time before they default again. They will exit the euro at some stage. It could happen as soon as 2015," he concluded.
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MORNING BRIEFS - The cost to consumers of products or services that are not up to scratch is estimated at half a billion euro here. This is according to a study from the new Competition and Consumer Protection Commission. It is the first time a study of this size and scope has been conducted here and it finds that 44% of consumers experienced a problem following the purchase of a product or service in the last 12 months. The area most likely to cause difficulties was in the provision of internet, television or telecommunications, followed by financial goods and services.
*** The US city of Detroit will officially exit bankruptcy today when it starts the process of paying off its creditors. The city declared itself broke in July of last year as it buckled under $18 billion worth of debt. Under a court approved plan, the city's finances were restructured and around $7 billion of the debt was written off. Pensioners were also forced to accept cuts to their future benefits and many of the city's buildings and facilities were handed over to creditors.
