City hails David Cameron's hard line on Tobin tax

Cameron's veto means it is now highly unlikely the eurozone will go ahead with introducing a Tobin tax across the 17 countries inside the currency.

The tax was set to be levied at 0.1% on shares and bond trades and 0.01% on derivatives but has been widely condemned in the UK because it would drive business out of Europe to America and the Far East.

Angela Knight, chief executive of the British Bankers' Association, said: "An EU-wide Tobin tax would have had a disproportionate impact on the UK as it is Europe's biggest financial centre, and the hub for the world's financial transactions.

Our City does business globally but pays its taxes here, so retaining our strong, vibrant, international finance hub here is good for jobs and our economy."

Xavier Rolet, chief executive of the London Stock Exchange said: "The Prime Minister is absolutely right to be defending the UK's interests in Europe. The introduction of a financial transaction tax would have had disastrous consequences for the UK and all Europe."

Manoj Ladwa at ETX Capital said: "David Cameron's stance on the Tobin tax is just what we wanted to hear. This is the day he won back the City."

And Stuart Fraser, policy chairman at the City of London Corporation, said: "This would have been a tax on London and the UK. The European Commission's own impact assessment highlighted that, of the 57 billion (£48.6 billion) it would have raised across the EU, 40billion would have come from the UK."

Fraser added: "The Commission also highlighted that between 70% and 90% of all derivatives trading could move outside the EU, together with hundreds of thousands of jobs. Driving that volume of internationally mobile business outside Europe would have defeated the whole purpose of the Tobin tax."

Rolet said: "You only have to look at the recent example of Sweden, whose financial markets all but dried up when a similar tax was introduced. A financial transaction tax would hurt the very fabric of one of the UK's most valuable asset - a world-leading financial services industry powering the growth of 4.8 million small and mid-size firms."

Tony Anderson, banking partner at law firm Pinsent Masons said: "It is a sensible stance for the government to take. Such a tax would need to be introduced globally to avoid the risk of regulatory arbitrage and the risk that the number of financial transactions done in the EU would collapse."