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Nicolas Sarkozy Proposes Financial Transaction Tax, Says Britain Has 'No Industry'

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Nicolas Sarkozy has proposed a financial transaction tax
Nicolas Sarkozy has proposed a financial transaction tax

French president Nicolas Sarkozy has raised the stakes in Europe-wide discussions over a "Robin Hood" tax on financial transactions ahead of a meeting of European leaders on Monday, saying that he may unilaterally impose a levy.

Sarkozy is currently struggling to fight off the challenge of socialist leader Francois Hollande, as elections in the country approach this spring.

The tax will be levied at 0.1 per cent and is due to come into force in August, whether or not European leaders agree to an EU wide tax.

"What we want to do is create a shockwave and set an example that there is absolutely no reason why those who helped bring about the crisis shouldn't pay to restore the finances," he said in a TV broadcast on Sunday.

Sarkozy also took the opportunity to take a swipe at the British government when he said he wanted France to remain a "land of production” unlike the UK which had "no industry" left.

Proposals to introduce an EU-wide transaction tax were among the reasons David Cameron refused to sign up to treaty changes last month in Brussels. The prime minister said the tax would unfairly hurt the City of London, where 75% of European financial transactions take place.

France holds a first round of elections on 22 April and the two leading candidates face a run-off on 6 May. Hollande has taken his party further to the left economically, analysts said. The party's plan is "more skewed towards traditional, statist French socialism than what we expected," Deutsche Bank analysts Gilles Moec and Mark Wall wrote in a note on Monday morning.

Hollande is leading in the polls, having courted working class voters by promising to more evenly share the burdens of austerity and to renegotiate the European fiscal union pact negotiated by Sarkozy.

On Sunday German chancellor Angela Merkel's CDU party suggested she would actively campaign to see her conservative French neighbour re-elected and would take part in campaign events across France.

But The Wall Street Journal reports that Sarkozy sought to distance himself from the reports Merkel wanted to help. "I did not know she voted in France," he told interviewers.

European leaders are meeting in Brussels today, with Greece and efforts to kick start growth in the bloc set to dominate the agenda.

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