FOR once, Britain has won a resounding victory in the EU. After three years of isolation, bitter argument and the threat of a veto, our partners have finally dropped their demands for a devastating new tax on savings. The Prime Minister has good reason to describe the outcome of the Feira summit as a personal triumph for Gordon Brown.
Yet while the Chancellor basks in deserved applause, the saga of the withholding tax remains a classic example of what is most damaging and dangerous in the way Europe operates.
The truth is that the proposal should never have been on the table at all.
This was a woefully misconceived measure, put forward by Germany as a way of cracking down on its own citizens who invest their money in tax havens such as Luxembourg.
However understandable the German aim, an EU-wide withholding tax would have had appalling consequences for the [pounds sterling]3trillion London eurobond market.
At a stroke, the scheme would have compromised Britain's booming financial sector. In the global economy, investors would simply have moved vast sums overseas to avoid the new tax. Some 12,000 jobs in the City would have been threatened. No other EU nation would have been affected so badly.
Perhaps that explains why our 'partners' saw no objection. At the Helsinki summit last December, the Prime Minister was utterly isolated while they united in strident demands for action.
Fortunately, the Blair/Brown axis held firm, though their triumph is hardly unalloyed. Yes, Britain has staved off a disastrous proposal. But what has the country actually gained?
Leave aside the question of what private understandings the Prime Minister and Chancellor may have had to reach with our 'partners' in return for their agreement not to destroy British jobs. …