Figures released by the OECD today show that Europe has made widespread cuts to overseas aid in the last year. Indeed, development aid from most EU-15 countries has been slashed, leaving Europe even further off-track to meet its promise to give 0.7 per cent of national income by 2015 to the poorest. In practice these cuts mean that 600 million children in developing countries will not be vaccinated against deadly diseases this year, and 500 million mosquito bed nets that protect poor people against malaria will never make it into the homes of poor people.

Although the economic recession certainly means that Europe must tighten its belt, cutting aid is no way to balance the books. Even small cuts in aid cost lives as people are denied life-saving medicines and clean water. Aid is such a tiny part of European budgets that cutting it has no discernible impact on deficits – it is like cutting your hair to lose weight.

So who is responsible for these massive cuts in aid? Well, the biggest cuts were made by Greece (-39.3%) and Spain (-32.7%), with Austria and Belgium also slashing aid budgets substantially. The picture is even bleaker than these figures show, with Spain having already announced further drastic aid cuts and with the Netherlands, which currently meets the 0.7 per cent target, also debating further cuts. Countries making savage cuts to their aid budgets must consider the human cost of their action and immediately reverse their decisions.

The good news is that Norway, Denmark and Luxemburg continue to meet their pledge to give more than 0.7 per cent of national income to aid, whilst the UK remains committed to meeting the target by 2013. In fact, Germany and Sweden have actually increased their aid budgets. The ability of some countries to meet their commitments or even increase their aid shows that cutting aid is more of a political choice than an economic necessity.

European countries must act now to reverse cuts and deliver on their promises to the world’s poorest.  Analysis by Oxfam shows that 2011 saw the first global drop in aid provision in 14 years and that at the current rate of progress, donors will not hit their 0.7 target for another 50 years. In 2011 Europe’s aid stood at 0.45% of national income – meaning that donors failed to reach their 2010 target of providing 0.51% of national income for overseas aid. This represents a European shortfall of €7.7 billion on their 2010 target.

EU leaders have shown that they can find large sums of money to bail out banks but yet, to the exceptions of Denmark, Norway and the UK, most are failing dismally to find much smaller sums to help the world’s poorest people. In light of this the sweeping cuts to European development aid are inexcusable. The world’s poorest people are being made to pay the price of austerity whilst the banks continue to get their bailouts. The World Bank has said that tens of millions of people have been pushed into extreme poverty by the economic crisis – this is not the time to pull support out from under their feet.

European governments have a responsibility to meet their aid commitments and to make the financial sector foot the bill and pay for the damage they have caused in poor countries. A tax on financial transactions would do just that. It offers a real opportunity to raise additional revenues to overseas aid, which are desperately needed. Indeed a financial transaction tax could raise €57 billion every year – money that can go towards helping poor people hit by the economic crisis and left in the lurch by sweeping cuts to European development aid.

European Finance Ministers are meeting in Copenhagen today and tomorrow to discuss the possibility of introducing a tax on financial transactions. Some journalists appear to be insisting that the prospects for such a tax are fading or even doomed, but this is not the case. Hopes for a financial transaction tax (FTT) are not dead.

For starters, Germany has not given up on the tax. The misconception running through the media that Finance Minister Schäuble has abandoned this project stands to be corrected. Yesterday, in an interview with radio station dradio, Schäuble said that Germany is ‘‘fighting with determination for a financial transaction tax’’. The day before, in the German edition of the Financial Times, he also asserted his willingness to move at a Eurozone level or involve fewer countries. He suggested that the nine countries that asked the Danish EU presidency to speed up the FTT process, back in February, should go ahead and implement the tax.

Germany is certainly not throwing in the towel and neither is Austria for that matter. Austrian Deputy Minister Andreas Scheider said on Tuesday that he refuses ‘to declare prematurely that such a central project is dead’ and insists that as many countries as possible should get on board for a tax on financial deals. In France, all the main candidates (Sarkozy, Hollande, Bayrou) to the Presidential election are in favour of the FTT.

Now it is important for Finance Ministers to stick to the option of a broad based FTT and not open the Pandora’s box of alternatives – this will not convince opponents such as the UK and will only delay discussions.

The nine countries that signed the letter to the Danish EU Presidency represent 90% of Eurozone GDP and 67% of EU GDP and include four of the five biggest economies in the EU. A tax on transactions by these countries alone, even if just implemented on equities and derivatives, would be a very significant step and has the potential to raise €38 billion every year

Arguments that such action will lead to capital flight are a weak and insufficient to block progress. Forty countries around the world already have a unilateral FTT and have suffered no such loss, and in any case the principle of residence would prevent capital flight from occurring.

Although the pros and cons of a European FTT will indeed be reviewed in Copenhagen, European Finance Ministers have certainly not sounded the death knell for a tax on financial transactions.

Over 70 organisations have urged the Danish EU Presidency to speed up negotiations on a financial transaction tax (FTT) in a letter sent ahead of tomorrow’s EU Finance Ministers meeting, where an EU FTT will be up for discussion.

Signatories want to see EU finance ministers take concrete steps towards a decision on the FTT  – otherwise know as the Robin Hood Tax – and stress that the opinions of opposing governments should not stop this from happening before the end of the Danish EU Presidency at the end of July.

Clearly, warm words on the FTT are no longer enough. It is time that European leaders stand up and be counted. They have a real opportunity to raise billions to help poor people here and overseas hit by the economic crisis, and to tackle climate change.

A letter recently sent by 9 EU Member States asking the Danish EU Presidency to accelerate the processs bears witness to the intention for the implementation of an FTT. Indeed, just a couple of weeks ago French parliament adopted an FTT that will be put in place in August.

Yet, as support grows for a European Financial Transaction Tax (FTT) so do the number of negative myths being put forward by its opponents. These include the idea that a European FTT would:

• cause business to relocate
• negatively impact on growht and jobs
• hit savings, pensions or small businesses
• seize money to fill EU coffers in Brussels

We’ve pulled together an Oxfam media brief to bust these myths and to explain why the dominant criticisms of the FTT are wrong. Leading economist Professor S. Griffith- Jones and Professor Avinash Persuad have also published an opinion piece  in the European Voice today, clearly laying out the reasons why critics are wrong about the financial transaction tax. Crucially, they point out that the total net effect of an FTT would be an estimated boost of Europe’s GDP by +0.25%, not a reduction.

The truth is that the UK and its friends in the financial sector have lost the moral and economic arguments. Not only is a Robin Hood Tax the right thing to do – the best evidence shows that far from reducing growth it would boost the economy. The Danish EU Presidency should heed the calls of civil society organisations and hit the accelerator for an EU wide FTT that can benefit those most in need.