Osborne and US clash with EU leaders over financial transaction tax

Fractious meeting of finance ministers sees Europeans vow to push on with tax to bolster rescue funds despite UK objections European leaders vowed to press ahead with plans for a new tax on financial transactions to bolster EU rescue funds, despite objections from Britain and the US. France, Germany and Austria said a tax on financial transactions could raise billions of euros to support a Greek bailout, but opposition from the chancellor, George Osborne, and the US treasury secretary, Tim Geithner, undermined progress. The row added further tension to an already fractious meeting of finance ministers in Wroclaw, Poland, which failed to achieve a consensus among EU countries on how to prevent a Greek default. “There are very considerable divisions,” said Jacek Rostowski, the Polish finance minister who was chairing the meeting, commenting on the transaction tax. “It obviously raises a lot of emotions.” On Friday Geithner told European leaders to stop “loose talk” that was damaging the eurozone and bringing “catastrophic risk” to the global markets. Geithner is reported to have said that divisions were “very damaging”. “Governments and central banks have to take out the catastrophic risk from markets … [and avoid] loose talk about dismantling the institutions of the euro,” he added. “What is very damaging from the outside is not the divisiveness about the broader debate, about strategy, but about the ongoing conflict between governments and the central bank, and you need both to work together to do what is essential to the resolution of any crisis,” he said, according to the Dow Jones news agency. The eurozone ministers have been discussing how to end the crisis in Greece that is threatening to engulf Europe. They agreed to delay a decision on Greece’s next bailout loan as part of a complicated political game designed to appease voters in countries sceptical of Greece’s claims that it is doing everything it can to comply with the austerity measures. They also extended the timetable for approval for the new expanded bailout rescue fund of €440bn (£385bn), which many economists believe is not enough to cover the possibility of several countries defaulting on debt. The head of Germany’s Bundesbank, Jens Weidmann, told reporters on Saturday: “The current economic pessimism is exaggerated.” Weidmann said “the growth slowdown” being experienced in Europe and America was mainly based on “temporary facts” such as “supply chain interruptions in Japan” in the aftermath of the earthquake and the high oil prices due to the conflict in Libya and elsewhere in the Middle East. Euro European Union Economics Economic policy George Osborne Financial crisis Global recession Banking Greece Europe Phillip Inman guardian.co.uk

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