In a move sure to raise the ire of French President Nicolas Sarkozy, British Prime Minister David Cameron says French banks would come to Britain to avoid tax.

In comments aimed squarely at Nicolas Sarkozy after the French president reportedly criticised British industry, Cameron said the concept of the tax at a time of economic difficulty was “mad” and “extraordinary”.

“The European Commissioner has told us this would cost Europe half a million jobs. Now when we’re all fighting for jobs and for growth, to do something that would cost so many jobs does seem to me to be extraordinary.

“And in the spirit of this healthy competition with France, if France goes for a financial transactions tax then the door will be open and we’ll be able to welcome many more French banks, businesses and others to the UK.

In a televised speech on Sunday, Sarkozy announced plans to introduce a 0.1 percent tax on financial transactions to come into effect from August this year in France.

He said in the same speech that Britain had no industry left, but while the British press played up the French president’s comments, Cameron played down suggestions of a rift.

Relations have been stormy between the two in recent months.

In December when Cameron criticised the eurozone’s efforts to tackle its debt crisis, Sarkozy reportedly snapped that — as Britain is not part of the single currency — Cameron should shut up.

Open Feud

This is not a rift, it’s an open feud. The only reason it’s not bigger is Cameron would rather deal with Sarkozy than Sarkozy’s challenger François Hollande.

Note that Hollande also wants a financial transaction tax. For further details please see Hollande Vows to Tax the Rich, Take Pay Cut; Sarkozy Promises German-Style Reforms; Merkel Cannot Save Sarkozy, But She Can Hurt Herself Trying

Transaction Tax a Bad Idea

Rest assured the Tobin Tax is a bad idea. I made the case in Why the Tobin Tax is a Bad Idea; Sweden’s Experience With the Tax; Details of Sarkozy’s Proposed Tax; Sarkozy Wants to “Provoke a Shock”

Mike “Mish” Shedlock
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