The exemption model would apply to France, Germany, Japan--pretty much--and Italy. The U.K. uses a model whereby you have a taxation and a credit for taxes paid abroad. These models all do exist out there; there is a range of them in place. I believe one of the witnesses at the table mentioned that the U.K. is considering shifting towards the exemption system, in which case they would be confronted with this very question of whether interest would be deductible.
On May 10th, 2007. See this statement in context.