David Prosser: The back door route to a new tax on the City

Outlook One other observation on Mr Barroso's speech: it was notable that he again spelled out the determination of the European Commission to introduce a financial transactions tax on the banks. It would apply across the European Union rather than only in the eurozone – and thus catch British banks too.

For the most part, those British banks seem relaxed about the threat – probably because George Osborne makes it clear at every available opportunity that he will veto this tax.

The Chancellor should not count his chickens, however. For those in favour of the duty in France and Germany have come up with a wheeze. Taxation changes, they concede, must be agreed by all 27 members of the European Union. A loophole, however, means that value added tax, considered to be a duty rather than a tax, can be introduced on certain items by a straightforward majority of members.

Classify the financial transactions tax as VAT and Britain's support would not be needed. Watch this space.