The FTT will levy between €25 billion (around $31.8 billion) and €43 billion in annual revenue but could wipe as much as 1.15 per cent off GDP in the EU, the Alternative Investment Management Association says, based on research it has carried out.

The transaction tax, an idea originally floated by the US economist James Tobin and sometimes also referred to by campaigners as a “Robin Hood” tax, is one of the ideas that surfaced as EU policymakers responded to the eurozone debt crisis.

Critics of an FTT argue that it will increase, rather than reduce, financial market volatility by reducing liquidity and the number of counterparties in a market. (To view an editorial comment on the tax, click here.) The costs of such a tax will ultimately be borne by the mass public in their financial lives, it is argued. Another issue is that if an FTT is imposed on the EU but not in other regions, financial trading will migrate from the EU, as happened when a US tax in the late 1960s created London’s offshore eurodollar market.

However, even some pro-market commentators, such as Martin Hutchinson, co-author of a recent book about the credit crunch and associated problems, argue that a Tobin tax might help shift money from trading to “value-added” business. (To read this publication's review of that book, click here.)

AIMA, however, is emphatic that an FTT will have damaging effects.

“Our analysis concludes that the EU’s proposed FTT will reduce or eliminate a vast amount of cross-border share and bond trading activity within the European Union, thus undermining the Single Market. And we are not talking about complex financial transactions but very simple buying or selling of shares undertaken by ordinary investors. This could have very serious unintended consequences - including a further tightening of financing conditions for business - at a critical moment for the European economy,” said Andrew Baker, AIMA chief executive.