EU set to go ahead with £50bn Robin Hood tax

European Commission president José Manuel Barroso announced plans to create a Finance Transaction Tax from 2014, under which all banks on the continent would have to pay a levy on all cash transfers between institutions.

However, Mr Osborne warned last night that the UK would “resist” the tax, unless it was enforced globally.

With the City of London handling about 80 per cent of all transactions in Europe, ministers fear Britain would stand to lose the most.

With the United States having ruled out such a measure, it raises the prospect of a tax existing only in the eurozone.

Warning that the EU faced its “greatest challenge”, Mr Barroso said once again that in time the eurozone would start issuing “eurobonds”, under which sovereign debt would be bundled up into a Europe-wide bond and offered to investors on behalf of the entire region.

The move is being resisted by Germany, amid public unrest that it is being left to pick up the tab and pay for the debt-striken “PIIGS” nations – Portugal, Ireland, Italy, Greece and Spain. Today, the Bundestag will vote on whether to widen the scope of the EU’s bail-out fund, in what could be a crunch moment for chancellor Angela Merkel, as she seeks to retain authority over her coalition government.

In a further development, IMF and European Central Bank officials will return to Greece today to assess whether the stricken country has done enough to rein in profligate spending – and thus deserves a further dose of a bail-out.

Markets yesterday showed once again they do not yet trust the EU leaders to come up with a sustainable solution to the debt crisis, with some of the gains of Tuesday wiped out. It came amid claims that private investors were being asked to take a bigger “haircut” on Greek debt write-offs, and signs that eurozone countries remain at odds on how any bail-out might be formed.

Despite the immediate crisis occupying the markets, Mr Barroso said it was time for the banks to show they would “make a contribution back to society after the €4.6 trillion of taxpayers’ money they have received in the last three years”.

He acknowledged that a new tax would require further changes to EU treaties and the backing of each member state.

The “significant additional revenue” raised would contribute to public finances, an EC spokesman added.

But a spokesman for the UK Treasury said it would “absolutely resist” any tax that was not introduced globally. “We would not do anything that is not in the UK’s interests,” he said.

German finance ministers have already said that if Britain stays out, then the eurozone will press ahead regardless.

Under the proposals, the financial tax would be levied at a rate of 0.1 per cent on all transactions between institutions, when at least one party is based in the EU. Derivative contracts would be taxed at a rate of 0.01 per cent.

In his speech, Mr Barroso also predicted that the EU would become more federalist as a result of the crisis. He said: “Once the euro area is fully equipped with the instruments necessary to ensure both integration and discipline, the issuance of joint debt will be seen as a natural and advantageous step for all.”

He also dismissed speculation that Greece might be forced to leave the euro if it defaulted on its debts. “Greece is, and Greece will remain, a member of the euro area,” he said.

Greece now faces a stern examination of its finances from ECB and IMF officials, who will then decide whether it has done enough to be granted a further €8bn of its €110bn bail-out package. G20 leaders met over the weekend to discuss the best way forward, but EU officials stressed that no grand plan of action had been agreed.

But investors remained sceptical of policymakers’ ability to solve the crisis quickly.

Ben Potter at IG Markets said: “Only when we see firm action being taken, rather than hollow promises, will confidence and sentiment begin to improve.”