The British Government says it will not go along with an attempt to introduce a tax on financial transactions, as proposed by the President of the European Commission.
Jose Manuel Barroso told the European Parliament that a 0.1% levy on bank trading would raise £50bn a year across the 27 EU member states, giving a much-needed boost to state coffers.
He said it was “time for the financial sector to make a contribution back to society”.
But the Treasury has told News reporters that it believes such a tax would need to be global, or banks would move their operations to other parts of the world.
The announcement was welcomed, though, by the Robin Hood Tax campaign, who claimed it showed Europe was “ready to ensure banks pay their dues”.
In his annual address to the European Parliament, Jose Manuel Barroso warned the EU was facing the biggest challenge in its 50-year history.
As well as proposing the financial trading tax, he also called on the European Central Bank to do whatever it took to ensure the eurozone stuck together.
And he said the 17 member states must approve the July 21 deal, which will extend the powers of the euro rescue fund.
Shortly afterwards,Finland’s parliament voted to increase the size of the bailout fund, known as the European Financial Stability Facility (EFSF).
“We need to complete our monetary union with an economic union,” said Mr Barroso.
“It was an illusion to think that we could have a common currency and a single market with national approaches to economic and budgetary policy.”
The EC president’s speech came as auditors from the EU and International Monetary Fund IMF prepared to head to Athens to assess the state of the stricken country’s finances.
They will then recommend whether to release billions of euros that Greece needs to avoid running out of money next month.
Meanwhile, the country’s powerful unions are expected to stage another strike, in protest at expanding austerity measures.
Anger has mounted over extension of a property tax until 2014 and an accelerated budget cut strategy.
The Greek government will cut the 730,000 public workforce by a fifth, reduce the public wage bill by 20%, as well as lower overall pensions by 4% in addition to a 10% cut already agreed in previous plans.
In a meeting with Greek Prime Minister George Papandreou, Mrs Merkel said the troubled country’s government must fully implement all its planned austerity measures.
But in Greece, taxi drivers, bus and tram operators and tax collectors prepared to strike for a second day and rail and transport system workers promised to join them.
The second bailout aims to ease Greece’s debt burden by imposing a 21% loss on private Greek bondholders.
However, many economists believe that a 50% loss is necessary to make the country’s debt viable.
The Financial Times reported that a split had opened in the euro zone over the deal and said as many as seven of its 17 countries argued that the private bondholders should swallow bigger write-downs.
Hardliners in Germany and the Netherlands were leading the calls for bigger write-downs but meeting fierce resistance from France and the ECB, which feared more selling of shares in European banks with big Greek bond holdings.
