EU allows financial transactions tax

The European Union has allowed 11 of its member states to introduce a new tax, designed to discourage financial speculation.

It is expected the financial transactions tax will be levied on every trade in bonds, shares and other financial products.

Supporters hope introducing the tax will raise billions of euros and discourage some amount of speculative short-term trading.

However, critics such as Britain and Sweden say trading will simply move to other countries to avoid paying the extra charges.

The Swedish finance minister Anders Borg warned the tax would also have a negative impact on the economy.

"We believe that the transaction tax is a proposal that has negative impact on growth," he argued.

"It will increase the borrowing costs for governments, for corporations and, obviously, for households."

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