Italy and Germany want transaction tax to be for whole of EU

The leaders of Italy and Germany dealt a blow to France's hopes for a financial transaction tax yesterday, indicating they could only support it if it applied to the whole European Union and not just the eurozone.

Italy's prime Minister Mario Monti said his government was more open to the idea in principle, abandoning Italy's blanket opposition in the past, but said the levy should apply across the EU.

"We are willing to back this initiative on an EU level. The ideal situation would be to have it globally. It could make sense if it were among all 27 EU countries. I'm not sure if it makes sense only at eurozone level," he said in Berlin at a press conference with Chancellor Angela Merkel.

Mrs Merkel said that while she and her party would back a tax on a eurozone level, Germany could not support that since her coalition partners will only back it on a EU-wide basis. Among the 10 EU countries outside the eurozone, Britain and Sweden are against the tax, fearing it would harm their financial sectors. This concern is shared by some eurozone nations such as Ireland.

David Cameron has said the UK could only agree to the tax if it were accepted globally.