'There is precedent for challenging an Order-in-Council and if we have to take that route we will do so,' Mr Bush told the news service, hinting that Cayman has a little more negotiating clout now than has been the case in previous disputes of this kind.

'For many years the Cayman Islands has been forced into signing agreements to please the UK and other financial institutions; measures which they themselves do not have in place, but I will not be placing this country in a bad position and then think again afterwards,' he explained.

It also emerged following last weekend's meeting of the Caribbean Overseas Territories, which was attended by top-level representatives from the Cayman Islands, the British Virgin Islands, Anguilla, Montserrat, and Turks and Caicos, that an economic impact assessment in relation to the likely effect of the Savings Tax Directive on the economies of the COT is in the pipeline.

'The meeting re-affirmed that there is a willingness on the part of the COT to cooperate with the objectives of the EU based on a fair, transparent, and non-discriminatory approach,' Cayman Net News reported.