UK gives ground on global tax on banks

By Huw Jones

ST ANDREWS, Scotland (Reuters) - World governments should consider urgently a levy on banks to fund future bailouts, British Prime Minister Gordon Brown said on Saturday, departing from London's longstanding resistance to a global tax.

France and Germany have led the way in Europe on seeking to force the financial sector to return some of the billions of public dollars ploughed into banks over a year of financial crisis.

London to date had resisted, mindful of the interests of its powerful financial services industry, which generates a large proportion of Britain's tax revenues, growth and jobs.

"We should discuss whether we need a better economic and social contract to reflect the global responsibilities of financial institutions to society," Brown told a meeting of financial policymakers from the G20 group of countries in Scotland.

"There have been proposals for an insurance fee to reflect systemic risk or a resolution fund or contingent capital arrangements or a global transaction levy," he said.

Brown's government this week forked out another 30 billion pounds on bailing out two of its biggest banks for the second time, and opinion polls all show him heading for a hammering by the opposition conservatives in next year's election.

Brown said the International Monetary Fund would review the possibility of a global transaction tax and report back in April next year -- signalling the G20 had agreed as a group to take up the matter more seriously.

"I do not in any way underestimate the enormous and difficult practical and technical issues that will need to be overcome that a globally cohesive system requires and raises.