Dear Archbish – do shut up

Stick to the sermons, Archbishop

Religion and commerce never mix well, but for Rowan Williams, the Archbishop of Canterbury, to throw himself onto the bandwagon already occupied by the Vatican, Jose Manuel Barroso, Uncle Tom Cobley and all, and back calls for a "Robin Hood" tax on financial transactions demonstrates very little understanding of the real world.

This is one of those superficially attractive ideas that in practice would have catastrophic consequences for the UK economy for no obvious benefit other than to the freeloaders of the European Commission.

The Archbishop claims to share the "the widespread and deep exasperation with the financial establishment" and thinks that a Tobin tax might even things out a bit if it were used to support the UK economy and international aid.

Nobody would quarrel with the proposition that financial services should be required to pay their fair contribution to the wider economy, but unfortunately a Robin Hood tax would go much further and very likely succeed in driving much of the industry from these shores altogether. In the long run, that's not going to benefit the UK economy, or indeed international aid.

As it happens, Dr Williams' intervention coincides with a letter to George Osborne, the Chancellor, from Andrew Tyrie, chairman of the Commons Treasury Committee, raising a number of concerns about the tax. Chief among these is that it might be imposed on us by Europe. Indeed, that's precisely what the European Commission is proposing to do.

This in itself would be a direct infringement of the independence of UK fiscal policy. As things stand, Europe does not set our taxes. It's one of the few things we still decide for ourselves. What's more, the Commission proposes that the proceeds be applied to the EU budget, contributing an estimated 23pc of the total by 2020. Since London is far and away Europe's biggest financial centre, accounting for the bulk of international trading in everything from foreign exchange to credit default swaps, it would by implication signficantly increase the UK's effective contribution to the EU budget.

There's no appetite for such a tax on a global level right now – the Americans are dead against it – so to impose it on the City would in time result in much of the business shifting off shore. It's hard to see how that could be in the UK's interests. You can throw the money changers out of the temple if you like, but they will still be with us; it's just that we won't be able to tax or control them.

Oddly, it's often thought by the likes of Dr Williams that the financial services industry is a world entirely unto itself, leeching off the face of humanity, but in fact the great bulk of what it does is provide a service to others. As Mr Tyrie asks, what effect would the tax have on all these innocent users of financial services, for example, manufacturers hedging their foreign exchange risks, or efficient cash management to ensure adequate liquidity in the wider economy?

For heaven's sake, Archbishop, think things through before you jump on the latest fast-buck idea from Europe for feathering the bureaucratic nest.