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The effects of a financial transaction tax on European households' savings

18 February 2014

​Special interest paper

Download 'The effects of a financial transaction tax on European households' savings' - full report (674KB)

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This study, commissioned by the International Regulatory Strategy Group (IRSG) and authored by London Economics, considers the impact of the proposed financial transactions tax (FTT) on European households’ savings arising through its effect on the value of equity and debt holdings in six EU member states. The member states covered in this study include four that plan to introduce FTT (Germany, Italy, Spain and Slovakia) and two who do not (UK and Luxembourg).

Across Europe, financial assets form an important part of European household savings, providing them with access to emergency funds and allowing them to build future retirement income, through direct investment and life insurance and pension funds.

Countries planning to introduce the FTT are likely to suffer significant losses in household savings portfolios as a result of taxing a broad range of financial instruments. In larger states with sizeable capital markets, this loss could amount to as much as €205bn, or 16% of the total value of equity and debt holdings. Households in the UK and Luxembourg also stand to lose an estimated €4.4bn and €0.4bn respectively, as a result of the FTTs extraterritorial reach.

If the FTT is borne by the end-users of financial services, this will hold back household consumption and slow economic growth. Previous research has examined the conflicts between the FTT and other aspects of European financial regulation, particularly the potentially destabilising impact of the tax on financial markets, and the increase in the cost of capital for businesses and governments across the EU.  Taken together, the studies illustrate how the tax could serve to dampen the economic recovery across Europe, slowing investment, consumption, job creation and growth, especially in participating member states such as Germany and Italy. 

Download 'The effects of a financial transaction tax on European households' savings' one pager - Deutschland (406kb)

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Download 'The effects of a financial transaction tax on European households' savings' one pager - España
(249kb)

Download 'The effects of a financial transaction tax on European households' savings' one pager - France (406kb)

Download 'The effects of a financial transaction tax on European households' savings' one pager - Italia (254kb)

Download 'The effects of a financial transaction tax on European households' savings' one pager - Slovensko (442kb)

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Published:
14 February 2014
Last Modified:
15 May 2015

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