European banks criticized Franco-German plans for a tax on financial transactions, saying they will jeopardize economic growth and distort markets, as the British, Dutch and Swedish governments distanced themselves from the proposals.

"The financial services industry should not be seen as an additional source of tax revenue but as an essential part of a stable and sustainable economy," said the Association for Financial Markets in Europe, which represents companies including Deutsche Bank AG and BNP Paribas SA. In a statement it said a "tax would be a brake on economic growth."

Lenders would pass on the cost of the levy to customers in the same way they already transfer the cost of U.K. Stamp Duty on share purchases to clients, Brian Mairs, a spokesman for the British Bankers' Association, a London lobby, said Wednesday. A tax would only work if implemented globally or it would trigger "distortions" in financial markets, Mairs said.

The British government, which oversees Europe's biggest financial center, is preparing to clash with its French and German counterparts over the levy, which would be applied in all 27 European Union countries. Finance chiefs failed to agree on a transactions tax in September 2010, amid opposition from nations including the U.K. The Swedish and Dutch governments said Wednesday that they oppose the plans.

EU taxation proposals require unanimous support from the bloc's 27 governments to become law.

"Without the practical detail on scope and implementation, this should be treated as political rhetoric for now," Oriel Securities Ltd. analysts including Mike Trippitt wrote in a note to clients Wednesday. "Implementation is knotty."

A tax would need to be applied at the Group of 20 level to be effective, the U.K. and Netherlands said. "Any financial transaction tax would have to apply globally — otherwise the transactions covered would simply relocate to countries not applying the tax," the U.K. Treasury said in a statement.

"The Dutch government has always pointed out that such a tax could be introduced globally," Dutch Finance Minister Jan Kees de Jager said in response to questions in parliament in The Hague. "If you don't do that, the distortion will be big. People can easily shift transactions to another jurisdiction."

Sweden's financial markets minister, Peter Norman, said that imposing the tax is unlikely to help EU efforts to calm market turmoil and would need to be global to have any effect.

A tax at EU level could generate 200 billion euros ($290 billion), according to economists at Royal Bank of Scotland Group PLC. A levy might also "raise questions" about whether Barclays PLC, Standard Chartered PLC and HSBC Holdings PLC, three of Britain's biggest banks, would retain their headquarters in London, Oriel said.

The European Commission said it will draw up proposals and an assessment of the tax's potential economic impact, before G-20 leaders meet in Cannes, France, in November, backing Tuesday's calls by French President Nicolas Sarkozy and German Chancellor Angela Merkel for the levy.

"The commission will go ahead with a legislative proposal for the FTT in autumn," Cristina Arigho, a spokeswoman for the EU's executive body in Brussels, said in a statement. A financial transactions tax, or FTT, "could be an appropriate tool to reduce excessive risk-taking."

In a bid to stem the worst financial crisis in Europe since the creation of the single currency, Merkel and Sarkozy agreed Tuesday to press for closer euro-area cooperation, tougher deficit rules and a harmonization of their corporate tax rates.

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