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By Simon Miller

Boris Johnson, the mayor of London has warned the European Commission (EC) that a Tobin tax would drive financial business outside the union.

Writing to the EC president, José Manuel Barroso, Johnson urged the Commission to drop the financial transaction tax proposal as soon as possible.

With London the largest financial sector in Europe, Johnson said the was particularly concerned with the negative impact of the tax on economic growth and jobs.

However, he also warned that all EU countries would suffer job losses in the long term as the financial sector and related sectors such as accountancy and law employ up to 10 million Europeans.

The European Commission's own estimates show that imposing the tax would reduce Europe's GDP by at least 0.5% and possibly as much as 1.8%.

The mayor also believed that the impact of the tax would not just be limited to the financial services sector and related industries, but will hit EU business and its citizens too with higher borrowing costs and decreased pension fund values.

Like UK prime minister David Cameron, Johnson would only consider supporting the tax if it were adopted globally - which is unlikely given the strong opposition from the United States.

He said: "At a time when many EU member economies are struggling, some on their knees, it would be madness to weigh them down with this new mill stone. Apart from weakening its financial sectors and London's in particular, it will hamper the ability of businesses across Europe to compete in the global market and have serious implications for EU jobs."

Johnson continued: "These proposals should be dropped immediately and energy directed towards designing sensible reforms which also support and promote the EU's financial services sectors and the growth of member states' economies."

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