Previously, the Commission had stuck to a firm requirement for automatic information exchange, as proposed in the draft Savings Tax Directive; but Switzerland's determined opposition to automatic exchange, which would breach its time-honoured commitment to banking secrecy, has led Luxembourg to threaten a veto of the whole process, supported to some extent by Austria and Belgium.

Last week, Luxembourg Prime Minister and Finance Minister Jean-Claude Juncker said: 'In the forthcoming ECOFIN meeting December 3, in Brussels, Luxembourg will make use of its veto to block the current proposal of the EU Commission . . . to impose an EU-wide withholding tax on investments and to abolish banking secrecy as it still exists in Luxembourg and Austria. Luxembourg is of the opinion that the agreement reached between the EU Commission and Switzerland in matters of EU tax harmonization is not enough for Luxembourg to abandon its banking secrecy.'

It's not clear whether the UK's conversion will be enough to change Luxembourg's attitude today; but as one of the original five EU members, Luxembourg is well used to cooking euro-fudge. And Mr Juncker himself is an ex-president of the Commission.

More uncertainty surrounds the attitude of the offshore banking centres such as the Isle of Man, Jersey and Guernsey which gave conditional agreement to information-sharing on the basis that Switzerland would give in. Currently most of them charge no tax at all on bank deposit interest, and they would be committing collective suicide if they imposed a 35% withholding tax on such payments. But if they are excluded, there would be a 'mighty sucking sound' as all EU bank deposits move offshore with the speed of light.