May 18, 2012 / 12:26 AM / 6 years ago

Cameron, France's Hollande clash on Tobin tax

WASHINGTON (Reuters) - Prime Minister David Cameron and new French President Francois Hollande clashed on Friday over the need for a financial transactions tax to fund growth but played down other differences over how to respond to the euro zone debt crisis.

<p>British Prime Minister David Cameron (L) and French President Francois Hollande shake hands at the end of their meeting at the British ambassador's residence in Washington May 18, 2012. REUTERS/Andrew Winning</p>

Both leaders said after a first 35-minute meeting at the British ambassador’s residence in Washington that they backed measures to cut deficits and spur growth in Europe, glossing over differences between Hollande’s pro-growth stance and Cameron’s emphasis on reducing debt.

But Cameron said he would maintain his staunch opposition to a tax on financial transactions that Hollande backs as a way to raise revenue to boost growth.

“On the financial transactions tax, I‘m very clear, we are not going to get growth in Europe or Britain by introducing a new tax that would actually hit people as well as financial institutions,” Cameron told reporters before his meeting at the elegant ambassador’s residence, designed by famous British architect Edwin Lutyens in the 1920s.

“I don’t think it is a sensible measure. I will not support it,” he said.

Cameron, keen to prevent damage to Europe’s leading financial centre in the City of London, has previously threatened to veto a European-wide financial transaction tax unless it was adopted globally, setting him on a collision course with France and Germany which back the idea.

A British government source said Hollande and Cameron agreed they had “different positions” on the financial transaction tax, also known as the Tobin tax.

Hollande also repeated to Cameron that he intended to pull France’s combat troops out of Afghanistan this year, two years earlier than a NATO timetable for ending combat operations.

Cameron understood this was an election promise Hollande had made, the British source said.

On the euro zone economic crisis, Cameron said Hollande and he both wanted to see “stability in international markets.”

“We both want to see countries deal with their deficits and we both want to see economic growth,” Cameron said.

Hollande said the two leaders were “convinced we need to continue improving our public accounts while restoring growth.”

On Greece, Hollande said he would like Greece to remain in the euro zone but it would be for the Greek people to “answer the question.”

“My position is we should do everything possible so that they say yes to that,” he said.

Cameron earlier called for “decisive action” to tackle the euro zone crisis.

“Britain wants to have a successful euro zone, that is where 40 percent of our trade goes. We need decisive action from euro zone countries in terms of strengthening euro zone banks, in terms of a strong euro zone firewall and decisive action over Greece. That has to be done,” Cameron told reporters.

“Clearly the Greeks have to make their minds up, they have to make their decision. Decisive action needs to be taken. That’s absolutely vital that it is because that will affect the stability not only of the euro zone economies. It affects our economy and it affects the world economy too,” Cameron said.

The EU trade commissioner said earlier on Friday that European officials are working on contingency plans in case Greece bombs out of the euro zone.

Cameron, a centre-right Conservative who built a close relationship with Hollande’s predecessor Nicolas Sarkozy, snubbed Hollande when the Socialist leader visited London during his election campaign, but at Friday’s meeting he invited Hollande to visit London soon.

Hollande made ironic reference to the snub, saying that since he had not been able to visit London before the election he would be “all the happier” to meet Cameron afterwards.

Additional reporting by Elizabeth Pineau; Editing by Diane Craft

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