Boris Johnson, the London mayor, has urged Brussels to drop plans to introduce a tax on financial transactions "at the earliest opportunity" amid fears that the levy would lead to job losses in the capital, Europe's largest financial centre.
Johnson has written to the European commission president, Jos Manuel Barroso, to warn that introducing a financial transactions tax across member states would drive business to financial centres outside the EU and damage its economy. He has urged Barroso to drop the proposals at the "earliest opportunity".
Both Johnson and the Conservatives in government are opposed to a levy unless it has been agreed globally.
Johnson said the tax would hamper competition with rival financial centres such as New York and Singapore, which would not have such a levy.
In his letter he argues that financial services are a key London industry and a significant employer, accounting for about 330,000 jobs or 8% of London's workforce.
"At a time when many EU member economies are struggling, some on their knees, it would be madness to weigh them down with this new millstone. Apart from weakening its financial sectors and London's in particular, it will hamper the ability of businesses across Europe to compete in the global market and have serious implications for EU jobs.
"These proposals should be dropped immediately and energy directed towards designing sensible reforms which also support and promote the EU's financial services sectors and the growth of member states' economies."
He added: "I would only consider an FTT if it were adopted globally by all our major competitors given the global market in which London's financial services operate. As I believe this to be currently an unfeasible proposition, not least given the opposition of the United States, much further groundwork would be needed before meaningful proposals could be put forward for adoption."
The proposal in Europe for a levy widely known as the Tobin tax after the US economist who proposed it in the 1970s, James Tobin would need the approval of the EU's 27 member states.
The chancellor, George Osborne, reiterated the government's position in the Commons on Thursday after updating MPs on the eurozone rescue deal thrashed out in Brussels this week. He said Britain would not accept a financial transaction tax at an EU level "while other places in the world don't have one".
Labour is seeking to apply pressure ahead of the G20 summit in Cannes next week. Chris Leslie, the shadow financial secretary to the Treasury, accused the chancellor of a "weak and defeatist attitude". He said "concerted efforts" were needed to broker a deal which would see the proposed levy apply in all of the world's big financial centres. "The European Commission's proposals in September for an EU financial transaction tax fall short of the mark, not least because money raised would be used to simply top up the EU budget," Leslie wrote on the Labourlist.org website.
"Whilst there are real barriers to winning this debate on the international stage there is also a real window of opportunity right now to do so. But by suggesting he thinks unanimous agreement at the G20 is not 'terribly likely', George Osborne seems willing to let the matter rest there, giving the impression there is no point even arguing for it."
He added: "Waiting for unanimity before even engaging with the issue means giving a veto to those who have vested interests in killing off the idea, or letting those with very different goals for the idea than the many millions of campaigners around the world set the terms of debate and potentially make it harder for Britain ever to join a scheme.
"The time has come for Britain to step up and show the leadership needed to broker a better deal, by being open to the idea that it is possible to win the argument for a different approach."
