It’s true that Sarkozy and Merkel don’t in fact phrase it quite this way but that is indeed the implication of what they’re saying as they try to resolve this eurozone crisis. That you should go out and buy as much London property as you possibly can, as quickly as possible.
Chancellor of Germany and president of France, Merkel and Sarkozy, said a City tax will be part of a new European treaty in an aggressive move that will force David Cameron to concede defeat or allow the eurozone to advance without Britain.
Angela Merkel and Nicolas Sarkozy defied the Prime Minister’s threats and announced a Financial Transactions Tax (FTT) will be part of the proposals for the EU treaty they want leaders to ratify on Thursday.
In an open letter to Herman Van Rompuy, Europe’s president, Ms Merkel and Mr Sarkozy said their demands should be “enshrined in the European Treaties” but warned without full EU support the eurozone “will have to go ahead”.
I’ve said before that the financial transactions tax is a dreadful idea: it will increase price volatility, the incidence will be on consumers and workers and we’ll all lose more than the tax will raise. Further, that it won’t even raise any money, for the losses from other taxes will mean a revenue loss overall.
However, what we’re seeing here is something really quite different. For what is now being said is that the FTT will come in: but that if Britain blocks it (or other non-eurozone states do) then it will be introduced in the eurozone alone.
Which would be absolutely fabulous for London as it would mean that the 20% of Europe’s wholesale finance which is not already in London would move to London. With all the implications that has for the price of decent property in the capital. Quite simply, the biggest obvious economic impact of such a scheme would be to boost London’s property prices.
And I, for one, if Sarkozy and Merkel are silly enough to do this, can only say “Bring it on!”.