The tax, named after the Nobel prize-winning economist Professor James Tobin who first suggested it in the 1970s, has been floated as a way of taming the volatility in the currency markets. Proceeds from the tax would then be used to fund third world development.

But French finance minister Laurent Fabius, who put forward the plan for his prime minister Lionel Jospin, found his EU colleagues lacked enthusiasm for the levy.

'Many of the finance ministers are of the opinion that the Tobin tax is not usable,' Hans Eichel, German finance minister, told Reuters. And AFX news reported Luxembourg prime minister and finance minister Jean-Claude Junker as saying: 'No single minister supported the Tobin tax.'

It is believed, however, that to have a significant effect on currency speculation, the tax would need to be set at a level above the 0.1% discussed by finance ministers - which could lead to transactions being taken offshore. To prevent large-scale flight from European currencies, the Tobin tax would need to be implemented worldwide and this is unlikely given the USA would have to pay more than any other country.

Heather Self, a tax partner at Ernst & Young, told AccountancyAge.com: 'The Tobin tax was a great theoretical idea, but is inappropriate for modern-day markets.'

'When the idea was first introduced the financial markets were far less developed than they are now. Such measures would be unlikely to settle the markets.'

Despite the lack of support, the Belgian presidency of the EU asked the European Commission to produce a report on the impact of globalisation, including an analysis of the unpopular measure.

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