Commenting on the President of the European Commission ManuelBarroso"s proposal to introduce a European Union FinancialTransaction Tax, and the UK Government"s reaction to this speech,the Policy Chairman at the City of London Corporation Stuart Frasersaid:"With one study suggesting that 62% of the revenues generated byan EU-wide transaction tax would come from the UK, this is not atax on the EU but a tax on London.

"If a financial transaction tax is truly necessary to shore upthe banking system, it needs to be implemented " as the UKGovernment has made clear - on a global basis otherwise it willoffer few safeguards in what is an incredibly interconnectedmarketplace.

The implications on growth, both here in the UK and across theworld, would also need to be carefully examined.

"Further comments that such a tax would also ensure thefinancial sector makes a 'fair contribution" were shown to bemisguided by the Commission"s own impact assessment.

"Not only does the financial services industry already make ahuge economic and social contribution to the EU and each of its 27Member States but the impact assessment demonstrated that moremoney could be lost by firms relocating outside of the EU thanwould be raised by the tax.

"It is clear that a transaction tax of this kind has no economicjustification.

"Manuel Barroso"s comments that the tax could be implemented inthe Eurozone alone if the UK blocks its progress in the EU werealso deeply worrying.

"Following the ECB"s policy proposal regarding the location ofclearing houses, there is a danger that a two-tier Europe is beingcreated, fragmenting the European Single Market that continues toprovide such great benefits to the UK and our fellow members of theEU.

"Such a move is something we should all work hard to avoid."