Jean-Claude Trichet on Thursday urged European Union policymakers to ditch plans for a financial transaction tax, warning that the bloc’s financial centres would lose out unless the scheme was adopted globally.

The president of the European Central Bank’s outspoken opposition to a so-called Tobin tax came just one day after the European Commission said it would look to raise up to €30bn a year from imposing a levy on all financial transactions.

Mr Trichet stressed that even a small tax could lead to European financial centres losing market share.

“I call for great, great prudence in introducing something which is not done at a global level,” Mr Trichet said. “Let’s be sure we don’t do something we might regret one day … If certain transactions are considerably more costly in Europe than in other parts of the world, they will be done overseas.”

Even a global tax might be counter-productive, he argued.

“I understand it appeals to some observers. But if we are not satisfied with the overall functioning of our financial system, is the right thing to do to put sand in the machine?”

Mr Trichet noted that even James Tobin, the US economist who developed the concept of a tax on financial transactions in the 1970s, had subsequently cooled to the idea before his death in 2002.

EU policymakers are considering a unilateral Tobin tax both as a way to raise revenue to finance EU spending, and as a way to curb speculation which some feel contributed to the financial crisis.

The idea is strongly backed by the European parliament, where Mr Trichet was speaking, and gained momentum this month when it was endorsed by José Manuel Barroso, the Commission president, ahead of the long-term EU budget proposals he unveiled on Wednesday.

But any new EU-wide tax needs the approval of all 27 national governments, some of whom are staunchly opposed to it. Britain, home to the City of London, said it would block any attempts to impose new taxes.

Anti-globalisation activists revived the idea of a global tax on financial transactions a decade ago. Though it has occasionally featured on the agenda of G8 and G20 meetings of national leaders, the idea has never come close to implementation globally.

Mr Trichet, who steps down in October after eight years at the ECB’s helm, has repeatedly clashed with European policymakers over how the EU should handle the economic downturn and the ensuing fiscal crisis that gripped parts of the eurozone.

He used his appearance in parliament to push for tighter EU oversight of country’s finances, including the use of automatic sanctions against countries running excessive deficits.

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