Boris Johnson has mounted a defence of the City of London against “endless demagogic attacks”, citing the financial sector’s £63bn contribution to UK tax revenues.
The London mayor, who has frequently lent his support to the City in the aftermath of the financial crisis, said at a conference in the Square Mile: “We must not continually bash sectors in which we are strong . . . I don’t think we should launch endless demagogic attacks on a sector that is indispensable to the global economy.”
Mr Johnson’s comments, delivered at the launch of the CityWeek conference for policy makers, regulators and professionals, come as the eurozone’s biggest economies are proposing a €30bn-€35bn tax on financial transactions that threatens to hit trading in London’s financial heartland.
George Osborne, the chancellor, last week launched a legal challenge to the levy at the European Court of Justice, citing “extraterritorial aspects of the proposal”.
In a roundtable session at Monday’s conference, Luc Frieden, Luxembourg finance minister and a World Bank board member, said the country was “very sympathetic” to Britain’s position on the tax. “We will certainly bring our support to the case that has been started in the European Court of Justice,” he said.
Chris Cummings, chief executive of TheCityUK, the finance industry lobby group and one of the event organisers, told the Financial Times the transaction tax would be “fundamentally bad” for UK business.
“The danger is that London becomes some kind of tax collection authority for business done through the City. That weakens the competitiveness not only of London but of Europe.”
Mr Cummings referred to a trade delegation to Brazil last year in which local business figures said they were considering expanding into London.
“The Brazilian companies that want to internationalise – banks in particular – want to come to London, but we have to give them reasons to come,” he said. “Introducing things like a transaction tax makes us look a lot less attractive.”
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