19 May 2012
The Prime Minister met the president in Washington before a G8 summit, and made clear he will block any French move that would harm the City of London.
Downing Street said Mr Cameron delivered a “strong” message to Mr Hollande over a potential financial transactions tax levied across the European Union. “We are prepared to veto an FTT at EU level,” said a source.
During his election campaign, Mr Hollande listed an FTT as part of a five-point plan to revive the European economy and resolve the eurozone debt crisis.
Advocates of the tax say it would cut down on speculative financial trading, and raise large sums for cash-strapped governments. Critics say it would smother economic growth and cost jobs.
Mr Hollande, a Socialist, has described Mr Cameron’s government as Britain is ‘indifferent to the fate of the eurozone’ and ‘attentive only to the interests of the City’.
Despite their differences over the tax, Mr Cameron and Mr Hollande are in broad agreement about the need for Germany to do more to resolve the eurozone crisis.
Mr Cameron this week backed the creation of “Eurobonds”, loans shared between the eurozone countries that would effectively see Germany backing the debts of weaker economies.
Diplomats are expecting Mr Hollande’s election to lead to several potential disputes with Mr Cameron over the EU in the months ahead.
After his election victory, Mr Hollande criticised the UK approach to the EU, saying that “Britain treats Europe like a self-service restaurant” and does not contribute enough.
The European Commission wants a 6.8 per cent increase in its budget, something would cost British taxpayers an additional £890 million.
Mr Cameron has promised to oppose any above-inflation rise in the EU budget.
However, Mr Hollande is said to be more sympathetic to a larger EU budget, arguing the spending could boost economic growth.
Mr Hollande was elected after opposing “austerity” economic policies such as those backed by Mr Cameron.
Before his meeting yesterday, Mr Cameron played down differences with Mr Hollande over fiscal policy, insisting that the president takes a similar view to the UK’s.
Mr Cameron said: “If you take France, even with the election of a socialist President in France, he’s actually said, “How am I going to stimulate the economy? I’m not going to do it through extra public spending, because actually we’ve got to cut back on that”. And his target for balancing his budget is actually a faster target than the one we have here in the UK.”
Mr Hollande and his advisers are said to be “very conscious” of Mr Cameron’s close relationship with Nicolas Sarkozy, regarding the Prime Minister as having given at least tacit backing for the former president during the French election campaign.