Some Eurosceptics, particularly those in the British Conservative Party, are eagerly anticipating the imposition of a Financial Transaction Tax on the continent. They expect investors to come streaming out of financial centres like Paris and Frankfurt straight into the welcoming arms of The City.

They are surely not wrong in thinking this; but what they don't take into account, either due to an innocent omission or willful blindness, is the effect this could have on the European economy. The imposition of a Financial Transaction Tax would reduce liquidity and make it harder for banks to raise funds, which would only serve to exacerbate the already severe shortage of credit in European economies. Here in Britain we would be hit hard by slower growth on the continent, which is indeed what is already happening.

If one were to liken the imposition of a Financial Transactions Tax to a grenade thrown at Europe's economy then, although in Britain we wouldn't be hit directly by the blast, we would still suffer shrapnel damage in the form of lower export growth to Europe.