Cameron and Hollande: PM warns Hollande over tax plan

UK PM David Cameron has warned French President Francois Hollande that Britain will not accept a Europe-wide tax on financial transactions.

Speaking in Washington ahead of their first meeting since Mr Hollande's election earlier this month, Mr Cameron said it was not a "sensible measure".

The transaction tax was a key part of Mr Hollande's election campaign.

Downing Street played down suggestions of a rift between the two leaders, who met ahead of the G8 summit in the US.

It said the talks were "not awkward" despite Mr Cameron's backing for Mr Hollande's opponent in the French presidential election.

Speaking ahead of their meeting at the British Ambassador's residence, the prime minister said the eurozone leaders needed to take "decisive action" to resolve the crisis over Greece.

But he also made clear his opposition to Mr Hollande's demands for an EU tax on financial transactions.

He said: "We are not going to get growth in Europe or in Britain by introducing a new tax that would actually hit people as well as institutions.

"I do not think it is a sensible measure. I will not support it."

Following the meeting, Mr Cameron reiterated their commitment to tackling their deficits while promoting growth.

"We both want to see stability in international markets, we both want to see countries deal with their deficits and we both want to see economic growth," he said.

He said the two leaders had "reaffirmed the importance of the strong relationship between Britain and France".

Mr Hollande said they must consider "any possible option" at the forthcoming European Council to rebuild their economies without adding to their deficits.

"We need to continue improving our public accounts while restoring growth. We will consider every possible option," he said.

He stressed that he hoped Greece would be able to stay in eurozone.

"We would like Greece to remain in the eurozone but it is for the Greek people to answer that question," he said.

"But my response is that we should do everything to ensure they answer 'Yes' to that question."

Mr Hollande confirmed that he would be withdrawing French combat troops from Afghanistan this year in line with his election promise, although he said they would continue in a training role.

Mr Cameron said that he had invited Mr Hollande to visit London to discuss issues on their joint agenda, and to meet the Queen.

He said they had also discussed Afghanistan, Syria and Libya, and said the two countries would continue to work together "strongly".

Mr Hollande referred jokingly to Mr Cameron's refusal to see him during the election campaign, saying: "I couldn't meet David Cameron before the elections - I am all the happier to meet him afterwards."

Labour leader Ed Miliband - who met Mr Hollande in London during France's presidential campaign while Mr Cameron backed Nicolas Sarkozy - said Mr Cameron could not help to solve the crisis in the eurozone "because he is such a central part of the problem."

Writing in Saturday's Financial Times, Mr Miliband accuses Mr Cameron of "crass arrogance" which "makes you wonder on what planet the prime minister is living."

The Labour leader added that "Italy aside, Mr Cameron is the only leader at the G8 who has led his country into a double dip recession" and claims his actions have led to "recovery turning into recession, no growth for almost two years, a million young people out of work and borrowing forecast to be £150bn higher than planned as a result."

World leaders are meeting to discuss the eurozone crisis, global trade and foreign policy at the G8 summit.