Prime Minister Mark Rutte has said he now favours a financial transaction tax, reversing his earlier stance against it. But he warned that the introduction of such a tax could unleash fierce competition between banks.

In today’s parliamentary debate on the eurozone debt crisis, the prime minister said he had discussed the possibility of imposing a financial tax with French President Nicolas Sarkozy.

Mr Rutte said he expects proposals to tax financial transactions will be high on the agenda of the G20 summit due to be held in France on 3 and 4 November. But he also called for “extreme reluctance” to introduce the tax if other countries did not go along.

The prime minister added that he wanted banks which receive government aid or help from the European Financial Stability Facility (EFSF) no longer be allowed to pay bonuses. On Sunday, Mr Rutte will join other EU leaders to discuss ways of bolstering the bailout fund.

(cl/rk)

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