Savers mugged by EU in Cyprus – no surprise there then


 Heavily indebted governments regularly pillage the money of savers. The reason is simple. Savers have spare money and governments don’t. So many governments want to live well beyond the means of their taxpayers. Some rob savers by inflation, eroding the value of their savings. Some do it by special savings taxes. Some do it by controlling interest rates, to ensure the government can borrow cheaply at the expense of the savers return. Some do all three of these things.

Now the EU and Cyprus are simply going to confiscate part  of a person’s savings away for being in a particular banks. That looks like a great way to encourage the mass migration of savings from weak banks in the Euro area to stronger banks somewhere else.

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  1. alan jutson
    Posted March 17, 2013 at 11:52 am | Permalink

    Yes, an action which will certainly stimulate the alternative economy and barter system, and leave the Government with even less money in the longer term.

    Who in their right mind would now put any money into Cyprus.

    Who will follow suit, and be next ?

    When will governments learn that defence of the realm and sound money are the very basics that government should provide for their citizens.

    To activily do the opposite, should be a treasonable offence.

    I see that George Osbourne (on the Andrew Marr show this morning) suggested he would protect UK citizens from this theft, with Government/taxpayers compensation, although he did not enlarge on this statement.

    • Disaffected
      Posted March 17, 2013 at 12:24 pm | Permalink

      JR, do you think Osborne is being disingenuous and misleading on TV this morning? The UK taxpayer will be providing the compensation for UK citizens who are having their money stolen by the EU. Therefore we are paying for this theft, what on earth is he talking about.

      Why is Cameron and Osborne allowing the UK to be part of the EU when it is an unelected dictatorship causing destitution across Europe, Spain, Portugal Greece to name three countries, where people are looking in bins for food and metal to sell. Instead of wasting out money on overseas aid and dictatorships in the middle east perhaps they should concentrate their efforts in Europe and stop the human suffering in EU countries. The fanatical EU superstate and the Euro is not worth it. Show an example to Clegg and Miliband and allow an in/out EU referendum now.

    • Rod
      Posted March 17, 2013 at 12:40 pm | Permalink

      I watched Marr this a.m, he said he would protect the savings of service people, civil servants who had no choice but to be in Cyprus, which seems fair to me.

    • Disaffected
      Posted March 17, 2013 at 12:52 pm | Permalink

      Do not forget the IMF is reported to be backing this deal and allowing this theft to occur. The UK is a contributor to the IMF and therefore an indirect contributor to EU bail-outs in direct contrast to what Osborne says about the UK not contributing to EU bail outs. It is simply not true. The UK needs to be out of the EU now and not have anything to do with such sordid behaviour. Follow the example of Iceland, do not let the EU become your masters; countries of Europe retain your freedom and sovereignty.

    • Mark
      Posted March 17, 2013 at 4:30 pm | Permalink

      I imagine the arrangement will be to exchange the “shares” the Cypriot government proposes to issue for cash. As the national accounts don’t write down contingent losses, it might not even damage the official deficit.

      • Leslie Singleton
        Posted March 18, 2013 at 5:36 pm | Permalink

        What does “the equivalent amount in shares” mean when the banks concerned are bankrupt? Do depositors get wheelbarrow loads of worthless paper?? And I am truly shocked to learn that the bondholders (the big institutions who should have known better) are apparently to escape the confiscation and that only the local ordinary people are going to suffer. How can that possibly be? Madness also how the obsessive maniacs making these decisions come up with a different bailout plan each time. One might have thought that that alone would be against someone’s human rights under some differential provision or the like.

    • uanime5
      Posted March 17, 2013 at 5:31 pm | Permalink

      Given that banks are giving people below inflation rates of interest people are effectively getting poorer by putting their money in a bank.

      • alan jutson
        Posted March 18, 2013 at 5:52 pm | Permalink


        Agreed, but this proposed theft is in addition to poor interest rates.

        Given the EU has a deposit guarantee scheme in operation for sums held in Banks of 100,000 Euro’s how can they take any sum below this figure from savers.

        Ah yes, they call it a tax to circumvent their own compensation regulations.

        Double standards again.

        All in it together.
        Not really, as only those who have savings (however small) will yet again have to pay.

        Simply a disgrace and tells us all we need to know about the workings and thinking of the EU.

      • zorro
        Posted March 18, 2013 at 5:58 pm | Permalink

        What is your solution to this problem?


    • Disaffected
      Posted March 18, 2013 at 2:23 pm | Permalink

      Osborne could always deduct it from the EU budget as it was the EU who stole the money. Sort of asset confiscation.

      • alan jutson
        Posted March 18, 2013 at 5:55 pm | Permalink


        “Osbourne can always dedeuct it from the EU Budget”.

        I do not think he would have the courage, or indeed the inclination.

        Like so many things, the UK taxpayer will once again pay the bill.

  2. Gary
    Posted March 17, 2013 at 11:52 am | Permalink

    Nevermind that the steady increase in inflation has already confiscated far more savings at home. The precedent for direct confiscation has now been set. This looks like an ominous foretaste of things to come. That $600 trillion derivative wrecking ball is doing its business and it won’t go away.

    • Denis Cooper
      Posted March 17, 2013 at 2:28 pm | Permalink

      Personally I’d prefer the gradual erosion of the value of my savings through net interest rates being below the rate of price inflation to having a slice of my money taken away overnight without any prior warning. It’s not clear whether this levy will apply to current accounts that people use to pay their living expenses, but if it does then there will be cases where they’d made sure that they had enough money in their accounts to pay all of the bills they were expecting but instead they may now become overdrawn if all those bills are paid, and then on top of the slice taken by the government the bank may take more in charges and interest. Potentially it’s a hugely disruptive thing to do and I hope the UK government will never do it.

    • lifelogic
      Posted March 17, 2013 at 2:52 pm | Permalink

      Exactly and all assisted by Osborne’s soft PIGIS loans and the IMF loans. How are are the promised profits coming along from Ireland and the rest? Perhaps he will tell us in the budget how much has been lost so far?

      • Bob
        Posted March 17, 2013 at 6:10 pm | Permalink

        “Perhaps he will tell us in the budget how much has been lost so far?” Or maybe not.

      • zorro
        Posted March 17, 2013 at 8:02 pm | Permalink

        He’ll probably say that we’ve had a negative profit from the PIGIS loan…….


        • lifelogic
          Posted March 19, 2013 at 9:35 am | Permalink

          Perhaps he will describe tipping the cash down the drain as “pump priming” or “a large investment in the future”.

          No double he will also be telling lots about all the “gifts” he will “give” us, long after he and his party have left office in May 2015.

    • sm
      Posted March 18, 2013 at 1:48 pm | Permalink

      Why compensate Cypriot deposits and impose a QE driven stealth inflation tax, zero interest policy in the UK?

      Surely logic would mean compensation for real negative interest rates in the UK?

      Just who exactly are being bailed out and why? 50,000 depositors who are they? (not all soldiers i bet).

  3. They Work for Us
    Posted March 17, 2013 at 11:59 am | Permalink

    Let us not forget Harold Wilson’s statement that the pound in your pocket had not been devalued – only the pound abroad.

    It is no suprise that there are American backwoodsmen who decide to live their life with as little interaction with the state. Interaction only brings them hassle and costs them money.

  4. lifelogic
    Posted March 17, 2013 at 12:11 pm | Permalink

    A good way to start a bank run in Italy, Spain, Portugal ….

    I suppose the theft is no worse the Gordon Browns theft of pension funds or Hammersmith’s mugging of motorists, in principal but more of a shock to people perhaps.

    The UK government should not compensate anyone and certainly not just to the already feather bedded state sector!

  5. simonro
    Posted March 17, 2013 at 12:11 pm | Permalink

    With inflation, taxation, and low interest rates, you can decide what to do with your savings. You can invest them in shares or bonds, you can move them into a pension, you can pay off your mortgage, you can buy gold or other assets, or you can spend them on beer and holidays.

    When the government simply confiscates your money overnight, your only real choice is to empty your accounts of what is left of your cash, put it out of their reach, and make sure they never hold power again.

    This is a barely believable move by the EU.

  6. Sue Doughty
    Posted March 17, 2013 at 12:20 pm | Permalink

    That is why I never leave money in a British bank account – we had a Labour government and I never got out of the habit. But now they are saying other euro states might follow suit, namely the Netherlands, home of many stock broker’s banks! Maybe I had better blow the lot on a new car?

  7. Leslie Singleton
    Posted March 17, 2013 at 12:25 pm | Permalink

    Has Angela Merkel agreed to this (Hard to credit) and what do the German people make of it? My first reaction was outright disbelief (I thought some journalist had simply misunderstood a mere proposal) and my second was to check that it is not 1 April. The obsessives running the Eurozone have gone even more barking mad than usual. You would have thought that anything would be better, even from their point of view, than this.

  8. NickW
    Posted March 17, 2013 at 12:36 pm | Permalink

    So much for the “Single Market” and the rule of law. The EU Deposit guarantee scheme has been torn up.

    The ease which with the EU flouts its own treaties is making Europe seem more like the “Wild West” of American folk law with every passing day.

    Money deposited in any Eurozone bank is no longer safe.

  9. The PrangWizard
    Posted March 17, 2013 at 12:42 pm | Permalink

    With this State sponsored robbery and the attack on the free press we need some planning. That is we need to plan how to take to the streets (peacefully-ed). We must get the State off our backs and out of our minds.

  10. Peter Colman
    Posted March 17, 2013 at 12:42 pm | Permalink

    How anyone can still argue that there is any benefit for us remaining in the EU is beyond me – they must be suffering from some sort of reality dysfunction. The more the EU does things like this, the stronger UKIP will become and the weaker becomes the position of any europhile party.

    I’ve just seen that this government will guarantee the savings of government and military personnel. Now I’ve no problem protecting our boys but why are us tax payers being asked to stump up for a bailout of Cyprus? Who asked us? And since your government is agreeing to this bailout, how come private savers are not being compensated? This is beyond parody.

    The Tories really have absolutely no chance of winning the next election. Don’t you think it’s time that you consider joining UKIP?

  11. Border Boy
    Posted March 17, 2013 at 12:43 pm | Permalink

    Dumb move! Expect the Dollar and an otherwise weak Sterling to strengthen and the Euro to weaken once markets open in the morning. It would be interesting to know whether the EU negotiators (Angela Merkel I suppose) gave any consideration to the prospect of capital flight. At the very least it can be anticipated that deposits in Greece, Spain Italy and Portugal to be moved elsewhere and quickly.

  12. Man of Kent
    Posted March 17, 2013 at 12:44 pm | Permalink

    Meanwhile ,I bet the Cypriot ministers/civil servants ,oligarchs were all tipped off in advance and the money may well be in London by now.

    How else do we account for the rise in sterling against both the Euro and US Dollar in the past few days ?
    It surely can’t be on account of our improved economic performance.

  13. Timaction
    Posted March 17, 2013 at 12:46 pm | Permalink

    This action by the Cypriot/EU authorities shows the current mind set of the EU, its officials of this state sanctioned theft.
    In this Country the politicians have already sanctioned taxes at every opportunity. When you earn it, save it, invest it, earn dividends on it, sell anything, buy most goods, die etc etc. This may give them ideas. Who on earth would put any further money in a Cypriot Bank or come to that Portuguese, Spanish, Italian, Irish, Greek. I worry that there may be a run on the Banks next week and am considering withdrawal from accounts in the UK. The madness has to stop and all countries should legislate to stop their politicians spending more than they raise in taxation. The UK included.

  14. oldtimer
    Posted March 17, 2013 at 12:56 pm | Permalink

    I suppose an old fashioned smash and grab is a change from the slow boil of savers as practised by the UK government. It will be instructive to see what happens on Monday in the rest of Europe, especially in Spain, Italy, Portugal and Eire. I should not be surprised to see some people taking cash out of the banks and stuffing it under the mattress.

  15. Normandee
    Posted March 17, 2013 at 12:57 pm | Permalink

    Small country, small population, massive deposits from Russians, a good testing ground for future policy. Not going to quite so easy with a bigger, more volatile population like, say, Italy or Spain. I wonder where Cameron has stashed his trust fund?

  16. Gary
    Posted March 17, 2013 at 1:10 pm | Permalink

    You are spot on on that this may be an induced shock to scare money into The Core away from the Periphery. Which begs the question, how short of money is the core ? It may also have to do with Russian expat money intrigue.There are signs everywhere that things are rapidly deteriorating.

  17. Martyn G
    Posted March 17, 2013 at 1:11 pm | Permalink

    It is theft, pure and simple theft. If carried out by others it would result in criminal charges being brought. However, the EU is now invincible and can simply dictate such a measure but I do wonder if the EU will be stupid enough to demand the same of Italy and Greece before people pull their money out of their banks?
    And what if the Cyprus government cannot get it voted into being tomorrow? Why, they will be told to go back and try again until they vote in agreement to thieving their people.

  18. Peter van Leeuwen
    Posted March 17, 2013 at 1:12 pm | Permalink

    In a high-level blog like this one, one might still have expected a little more nuance: for instance I don’t read that most of these savers are Russians, that there is an awful lot of momey laundering going on in these banks, that the banks have thus grown to over 5 x the national GDP and that the Russian government is not very forthcoming and that the IMF (of which the UK is a member), needed the solution to be sustainable, fully financed, and with properly allocated burden sharing. Apparently there is not so much worry about the migration of savings now suggested in UK media. But then, UK media have been wrong before, haven’t they?

    • Brian Tomkinson
      Posted March 18, 2013 at 6:23 pm | Permalink

      I look forward to reading your reaction when your savings are stolen by your beloved EU.

      • Peter van Leeuwen
        Posted March 18, 2013 at 9:14 pm | Permalink

        @Brian Tomkinson: You are misinformed (once again?). This “haircut” of innocent small savers (I would indeed fit into that category) is an idea of the Cyprus government, is collected by the Cyprus government and is not destined for the EU. The Cyprus government could have chosen to only take money from savers who have more deposited than 100,000 euros, but chose not to do so. My government would never do that (the 100,000 guarantee was givin in 2008 when the Anglo-Saxon financial crisis also hit the Netherlands.
        Strange that a euro savings account in the Netherlands would give me about 1 % interest, but in Cyprus 5%. Isn’t that rather high? Wouldn’t that attract risk-takers, a bit like with Icesave in Iceland.

        • Brian Tomkinson
          Posted March 19, 2013 at 8:53 am | Permalink

          You can never accept any criticism of your beloved EU. Was it not the EU commission that suggested this theft from the Cypriot banks? The 1oo,ooo euro guarantee appiled in Cyprus but that didn’t stop the thieves. That is why this is not only wrong but madness when it shows depositors that guarantees are worthless in the eurozone. Your country will be no exception.

          • Peter van Leeuwen
            Posted March 19, 2013 at 5:10 pm | Permalink

            @Brian Tomkinson: Brian, I actually have my own criticism of the EU. The suggestion done by the EU? That is too easy. In discussions between the Troika and Cyprus it was determined that the maximam bailout would be only 10 billion (IMF demand that debt burden be sustainable), so the rest (5.8 billion) would have to come from Cyprus itself. There were various scenarios for this from which the Cypriot government made a choice. Maybe the EC or the ECB should have prevented this one-time savings tax out of fear for contagion to other euro banks in futre, but that is hindsight criticism, which I could join. Calling a tax a theft is rather strange. How does the Cypriot government collect 5.8 billion in other ways than by a tax?

    • Mark
      Posted March 19, 2013 at 12:49 am | Permalink

      The usual advice is not to tangle with Bears with sore heads. The question becomes who do the Bears consider is tangling with them? Cypriot politicians, or EU ones? It should not be forgotten that it was not so long ago that hails of bullets in upmarket Moscow hotel foyers were quite common.

  19. Peter van Leeuwen
    Posted March 17, 2013 at 1:14 pm | Permalink

    Sorry for posting a link, but here is mrs. Lagarde:
    (and the other parts of the press conference can be found underneath)

  20. Gewyne
    Posted March 17, 2013 at 1:16 pm | Permalink

    Feel really sorry for people who have been prudent and put savings aside.

    The EU introduced rules to protect personal savings in banks, seems as with any EU law when they want to forget it, they just change the words to get around it.

    So can this happen elsewhere ? The thing is you cannot know, and by the time it’s announced it’s to late to move your money ( The Cypriot government said right up to the point that this tax was implemented that they had no intention of doing this, then on a Friday night, BANG, youv’e been hit by it, nothing you can do, tough luck, yes we lied – what you going to do about it ?).

    It would appear the most prudent thing for savers with money in EU banks would be to move it – which is a really sad situation.

  21. Mark B
    Posted March 17, 2013 at 1:25 pm | Permalink

    I cannot help but think there is more to this. A lot of Russian money, suspect or not, is tied up in Cyprus. Locking it in this way, I suspect, hurts some powerful vested interests.

    If so, and as usual, it is we, the little people, that get shafted.

  22. David Langley
    Posted March 17, 2013 at 1:27 pm | Permalink

    Having spent some considerable time in Cyprus keeping the Greeks and the Turks apart, it would be interesting to consider how the Greeks feel about the EU bank robbery being perpetrated upon them. I wonder if in the fine print of your savings agreement there is a paragraph saying that the EU can pillage your savings at any time. Perhaps the Greeks wish they had put their money in the Turkish banks on the island who are not subject to the corruption of the EU project. Its a strange old world.

  23. HJBbradders
    Posted March 17, 2013 at 1:35 pm | Permalink

    Whilst I feel sorry for the Cypriots having their bank accounts plundered, isn’t this just what is happening to savers here as a result of the combination of high inflation and rock-bottom interest rates?

    • zorro
      Posted March 17, 2013 at 8:04 pm | Permalink

      Over the last 3/4 years, more than likely yes…..We’ve had roughly nearly 4% stated inflation and 1% on savings accounts…..


  24. Peter Richmond
    Posted March 17, 2013 at 1:52 pm | Permalink

    Considering that Europe has a history dominated by tyrants whether they be Roman emperors, Catholic monarchs, Napoleon, Hitler and now the anti-democratic EC should we be so surprised to see implementation of this kind of policy? Another reason to retain our independence from the EZ. We may not be yet out of the woods in the UK but at least it was good to hear George Osborne rule out this kind of theft.

  25. Jon
    Posted March 17, 2013 at 2:23 pm | Permalink

    I take the point that government regularly pillage savings but this seems to be on a different level and front. Not entirely convinced they will go through with it.

    I wonder to what extent or not that the EU is behind it. There surely must be people in Brussels worried that this could lead to an outflow of money from other Mediterranean countries.

    • uanime5
      Posted March 17, 2013 at 5:32 pm | Permalink

      I doubt the EU cares how Cyprus raises the money as long as they raise it. It’s for each country to chose they to manage their budget.

      • Leslie Singleton
        Posted March 18, 2013 at 6:00 pm | Permalink

        unanime–Why aren’t you banging your usual drum about in this case rich countries like Germany bailing out poor countries like Cyprus? Or is it only rich nasty and greedy UK employers downtreading their impoverished hard-working and deserving staff that gets your goat?

      • Jon
        Posted March 18, 2013 at 9:08 pm | Permalink

        It seems the EU was behind it and as predicted wiped billions off the stock exchanges with no doubt more ramifications to follow. Looks like employers there will be fewer and have less money to employ people.

        I think there is an opportunity there for collective offshore accounts. Normally too expensive but perhaps not anymore for the money on deposit in the Med?

        • Jon
          Posted March 18, 2013 at 9:11 pm | Permalink

          Just to spell it out, for those who run offshore deposit accounts a whole new market has just become cost effective for a few million around the Mediterranean.

  26. Graham Swift
    Posted March 17, 2013 at 2:28 pm | Permalink

    No doubt this would happen in the UK after 2015 when the moronic masses return a Liebour administration with Popeye Balls as Chancellor. A certainty thanks to the weakness of Cameron.

    • lifelogic
      Posted March 17, 2013 at 8:04 pm | Permalink

      Almost a certainly, perhaps, at best a 10% chance of avoiding Liebour, balls and the state sector unions. Cameron had such an opportunity but has blown it with his EU and IHT ratting, quack greenery, equal TV billing for Clegg and his over tax, borrow and waste strategy.

      What bit of “cut the state sector by half” does he not understand?

  27. M Davis
    Posted March 17, 2013 at 2:45 pm | Permalink

    This will only encourage savers to save at home (gold?), no matter where they live, where there is no incentive to save. If this happened then I’m sure the Governments would then penalise gold holding. They will do anything to get hold of tax payers money!

    • Bob
      Posted March 17, 2013 at 6:19 pm | Permalink

      @M Davis
      In 1987, the Burmese government demonetized the 25, 35, and 75 kyat notes without warning or compensation, rendering some 75% of the country’s currency worthless.

      Life in the EU could become increasingly similar to life under the Burmese junta.

    • Dennis
      Posted March 18, 2013 at 3:24 pm | Permalink

      Is there any point in buying gold when VAT is payable and not recoverable when selling it?

      • Mark B
        Posted March 18, 2013 at 8:50 pm | Permalink

        As far as I remember, there is no VAT on gold. Silver, Platinum and other precious and semi-precious metals yes, but not gold.

        I am not a financial adviser or an expert in bullion. There are many reputable companies out there should you or anyone else think of investing, with some offering advice.

        It always pays to do your research.

  28. stred
    Posted March 17, 2013 at 2:50 pm | Permalink

    Bank deposits in the Euro area were protected by a guarantee up to 100kE. Has this changed now?

    • stred
      Posted March 17, 2013 at 2:52 pm | Permalink

      Bank deposits in the Euro area were protected by a guarantee up to 100kE. Has this changed now?

      And what is the position with Euro accounts held in Uk banks onshore and offshore?

      • John Wood
        Posted March 17, 2013 at 7:18 pm | Permalink

        YEs the bank deposits are protected. if the bank where they are held collapses then the country’s compensation scheme (In the UK the FSCS to which all financial institutions contribute) would kick in.

        However the liabilities of the banks in Cyprus is 7 times GDP so there is no way compensation could be paid to everyone.

        Thus the banks aren;t failing. They are being recapitalised by an injection of cash for shares.

        This is, of course exactly what happened with Northern Rock, RBS and HBOS back in 2008. The only difference is that the money for shares is being applied retail (i.e to the savers in the banks) rather than wholesale (by the Government borrowing money in the taxpayers name).

        In fact this is probably a fairer way of doing it! Those people with larger amounts in the banks will receive more shares. After 2008 all shares were being held in the taxpayer’s name rather than on an individual basis.

        And yes I am being a cynic – the shares are worthless.

      • behindthefrogs
        Posted March 17, 2013 at 11:52 pm | Permalink

        This like the UK guarantee is only against the bank itself going out of business. It is not a guarantee that the EU or the country’s government won’t apply a form of tax that depletes the capital deposited.

      • APL
        Posted March 18, 2013 at 7:52 am | Permalink

        Stred: “Bank deposits in the Euro area were protected by a guarantee up to 100kE. Has this changed now?”

        Well of course it has changed, the result of this EU – Cypriot decision is to steal Osborne in collusion with the EU called it a tax, 10% of you balance. So the protection is only up to 90% of your balance.

        This is the stupidest thing they could have done, the whole idea of a deposit protection was to give confidence in the banks, this has utterly destroyed what fragile confidence there was.

        • stred
          Posted March 18, 2013 at 9:58 am | Permalink

          This seems similar to the Hollande ‘social charge’ on ‘profit’ when selling a second home. This allows the British to charge CGT without inflation allowance and the French to get one in too, double taxation agreements having been circumvented. The total for a holiday house owned for 20 years would be over 65%.

        • A different Simon
          Posted March 18, 2013 at 11:42 am | Permalink

          Is the point of calling it a tax to avoid triggering credit default swap payouts ?

    • Leslie Singleton
      Posted March 17, 2013 at 5:17 pm | Permalink

      stred–Excellent question

    • uanime5
      Posted March 17, 2013 at 5:34 pm | Permalink

      Bank deposits are protected from banks collapsing, not from new taxes. So nothing has changed.

      Banks in the UK are governed by UK law, banks in Cyprus are governed by Cypriotic law; so only banks and accounts in Cyprus will be effected.

      • Leslie Singleton
        Posted March 18, 2013 at 6:04 pm | Permalink


    • Nick
      Posted March 17, 2013 at 6:06 pm | Permalink

      It’s guaranteed. It’s a tax.

      Can’t quite tell the difference, can you?

    • Leslie Singleton
      Posted March 18, 2013 at 11:43 am | Permalink

      The levy is being treated as a tax so the guarantee is not applicable. That’s them talking not me. One thing I cannot get my head round is what I regard as the lunacy of coming up with a new “plan” for each country as the crises roll on. What do these obsessive inward-looking maniacs imagine the people to whom the more severe plans apply are going to think? What on earth happened to the harmony at all costs golden rule?? So far from that, each “plan” seems to bear no relation whatsoever to the last or ones before that. And then they change them anyway so the need cannot have been that great in the first place. Bonkers. We shouldn’t be touching any of this with a barge pole–except that we are in it up to our necks.

  29. Electro-Kevin
    Posted March 17, 2013 at 2:54 pm | Permalink

    I think this news from Cyprus is truly awful (I have relatives living there.)

    It is a sign of the wicked things yet to come from the EU.

    “There are a lot of gangsters keeping money in those banks anyway.” Since when was it acceptable to punish the innocent to get at the guilty ? This explanation is tosh anyway.

    Is it any worse than our own government raiding pensions and destroying savings through QE at the behest of people who over-borrowed ?

  30. margaret brandreth-j
    Posted March 17, 2013 at 3:25 pm | Permalink

    If the precedent is to be followed, more animosity will also follow.The public will be squeezed so much and then, pop !If they hit us from all sides, we will bubble and grow in the centre of the tyranny.Britons never , never , never shall be slaves..I hope.

  31. waramess
    Posted March 17, 2013 at 3:34 pm | Permalink

    …..but not to worry, they say this is exceptional and temporary.

    Just like Income tax which was a temporary measure to finance the Napolionic wars?

    If the EU get away with this in Cyprus then be very very scared, Nothing and nobodywill be safe

    • uanime5
      Posted March 17, 2013 at 5:36 pm | Permalink

      The EU isn’t behind this, the Cypriot Government is. To a degree so are the banks as the Cypriot Government needs the money to bail them out.

      • Leslie Singleton
        Posted March 18, 2013 at 6:07 pm | Permalink

        unaime–You really believe, don’t you, that the sun shines out of the EU’s (word deleted-per pro ed).

    • Nick
      Posted March 17, 2013 at 6:06 pm | Permalink

      You might not have seen what they did in Hungary. 100% of all private pensions

  32. Duyfken
    Posted March 17, 2013 at 3:37 pm | Permalink

    Do we not have just the same theft of savings, by the government’s propensity for QE and more QE?

    • Bob
      Posted March 17, 2013 at 6:23 pm | Permalink

      “Do we not have just the same theft of savings, by the government’s propensity for QE and more QE?”

      Correct. It’s theft by stealth under Continuity Brown.

  33. JimF
    Posted March 17, 2013 at 3:40 pm | Permalink

    Yes, so many governments want to live well beyond the means of their taxpayers, including the UK government. So now our taxpayers are not only bailing out our own government, but Osborne insists we will also bail out “UK” savers in Cypriot banks? These are savers of another currency in another state. So will the UK government also be the backstop for protecting the Euro in Spain, Italy, Greece, when the same stunt is pulled there?

    • John Wood
      Posted March 17, 2013 at 7:21 pm | Permalink

      I think the protection only applies to forces personell and government employees who have had to relocate to Cyprus.

      Perhaps people wanting to live the rest of their lives ‘in the sun’ will now consider the additional risks that this now entails. Expect a reduction in emigration to Souther Europe.

    • lifelogic
      Posted March 17, 2013 at 8:08 pm | Permalink

      Only the state sector ones to be protected not the ones who actually pay for all of this.

      Government by the state sector for the interest of the state sector as usual.

      Still we are all in this together. (not me fortunately I have gone).

    • Nina Andreeva
      Posted March 17, 2013 at 8:59 pm | Permalink

      If Cyprus starts a Chinese firecracker of runs on Euroland banks , I would not put it past the powers that be to use the upcoming Easter holidays to try even more brazen stunts. If I was there I would be cleaning out my local ATM just before Good Friday so as not to get caught short. This shows saving the Euro is a take no prisoners game!

      • uanime5
        Posted March 18, 2013 at 3:15 pm | Permalink

        Given that no other eurozone country has such a high bank debt to GDP ratio as Cyprus the chance of this spreading is minimal.

  34. Mike Stallard
    Posted March 17, 2013 at 4:40 pm | Permalink

    I have a friend who has a house in Cyprus and who, until a year ago, kept his savings there too. I wondered why he was in such a hurry to withdraw his money from his Cypriot bank!

    Have you read this important piece of information from Guido Fawkes’ blog yet?
    “Schedule 4, Point 1 of

    will bring blogs under the regulator’s control:

    Which means, I suppose, that everything on this blog will have to go in front of a government censor.

    • Bob
      Posted March 17, 2013 at 6:27 pm | Permalink

      @Mike Stallard
      ” I suppose, that everything on this blog will have to go in front of a government censor.”

      I shouldn’t think so, Mr Redwood is doing a pretty thorough job of censorship by himself.

    • Mark
      Posted March 17, 2013 at 6:45 pm | Permalink

      The silver lining:

      Lots of jobs in Minitrue…

    • matthu
      Posted March 17, 2013 at 8:23 pm | Permalink

      That is what EU governments, the Australian government and now, apparently, our own would dearly like to do i.e. control the Internet.

      From a technological view they will not manage to do it e.g. they cannot even manage to prevent our youth from viewing porn on the Internet. How will they be able to prevent you from viewing Guido?

      They also want to be able to prevent you from reading e.g unregulated climate blogs that attract more than however many hundred thousand visitors.

      This will lead to the overthrow of governments if they attempt it. (My opinion, obviously.)

      • matthu
        Posted March 17, 2013 at 8:26 pm | Permalink

        Of course, this will not be attempted by means of technology, but by statute, licence and fear of prosecution of those owning the web sites.

        Every day we feel more and more like a police state. I have lived under one, and believe me, it creeps up on you very stealthily and before you know it those who you relied upon to speak up about it have been silenced by statute, or worse.

    • matthu
      Posted March 17, 2013 at 9:08 pm | Permalink

      Probably unnecessary to point out that this will only strengthen support for any party that has a more liberal view of journalism than does any of the three major parties.

      By “liberal view” I mean a liberalism unenforced by statute, not the sort of liberalism we have become accustomed to recently.

      • A different Simon
        Posted March 18, 2013 at 12:35 pm | Permalink

        I think it will be a long time before the electorate forgives Labour and that the Lib Dem’s are correctly perceived as shifty .

        However , UKIP are going to split the Conservatives votes to such an extent that they will lose a lot of seats to Labour/Lib Dems .

        The Conservatives only chance of victory in the 2015 Election is to preempt UKIP with either a referendum on the EU or a promise of an election if they agree not to contest seats .

        • A different Simon
          Posted March 18, 2013 at 12:36 pm | Permalink

          Correction : promise of a REFERENDUM if UKIP agree not to contest seats

          • Leslie Singleton
            Posted March 19, 2013 at 6:55 am | Permalink

            A different Simon–What with the Cyprus situation, the UKIP percentage will go up another 5% so the Conservatives should stop splitting their (that’s UKIP’s) vote.

    • Trimperley
      Posted March 17, 2013 at 11:09 pm | Permalink

      A Google search for “news blogs” gave 311,000,000 results. How many civil servants will they need to police them? Sad day for Britain if any legislation goes through.

  35. Posted March 17, 2013 at 4:47 pm | Permalink

    The demise of the Euro has been brought one step nearer due to this stupid decision.

    • uanime5
      Posted March 17, 2013 at 5:37 pm | Permalink

      Not according to the Cypriot Prime Minister, who claims that Cyprus need to do this or Cyprus will crash out of the euro.

    • lifelogic
      Posted March 17, 2013 at 8:11 pm | Permalink

      It does seem mad even from the EU high commands point of view. I assume Cameron will avoid addressing the issue in any real sense. I am sure he will find a distraction as usual.

    • matthu
      Posted March 17, 2013 at 8:30 pm | Permalink

      That is so true.

      If they allow Cyrpus to confiscate savings (very similar to a wealth tax, but extended to nearly everybody) it will discourage savings and investment. Not on ly in Cyprus, but also in Portugal, Italy, Spain … Money will flow into Germany or out of the EU altogether.

      This would hasten the collapse of the Euro.

      • Leslie Singleton
        Posted March 18, 2013 at 6:12 pm | Permalink

        matthu–Surely you realise that you are not allowed to moot even the possibility of the collapse of the Euro–you had better go and wash your mouth out with carbolic

  36. colliemum
    Posted March 17, 2013 at 4:56 pm | Permalink

    To me, this looks like a trial run, observed by governments around the world, and the IMF.
    If no bank runs happen – tomorrow in Greece, Spain, Portugal, on Tuesday in Cyprus, and if there are no riots, then other governments will be encouraged to use this same instrument. After all, they’re all highly indebted, aren’t they.

    So what security do we have that our own government won’t be doing this to us?

    • Mark
      Posted March 18, 2013 at 5:52 pm | Permalink

      The DT reported:

      ECB Governing Council member Ewald Nowotny, speaking on Austrian radio, said the eurozone periphery nations have “nothing to fear” from the Cyprus bailout, since the island’s unique circumstances – a banking system that makes up an above-average proportion of national output and a particularly high share of foreign depositors – make it a special case.

      Sounds like he had the UK in mind as another special case to me.

  37. Monty
    Posted March 17, 2013 at 4:59 pm | Permalink

    Presumably there will be a flood of money out of Cyprus, and probably also Greece, and maybe more of the PIIGS zones, as savers begin to panic. The next step for the affected zones would have to be capital controls. I doubt if that is even legal within the EU.

    Mugging is indeed a good description of what has happened to those savers. I can imagine this situation leading to the revival of a number of old hatreds between the peoples of Europe.

  38. Richard1
    Posted March 17, 2013 at 5:00 pm | Permalink

    But what’s the alternative? Cyprus and its banks are bust. If EU taxpayers are to bail them out is it not right that the creditors of banks, including depositors, share some of the burden?

    • Leslie Singleton
      Posted March 18, 2013 at 6:18 pm | Permalink

      Richards–What certainly is not right (though I may have this wrong since it seems so preposterous) is for only the small ordinary deposit holders (life savings and all that) to be mugged–as best I can understand the confiscation doesn’t touch the institutional bond holders at all–presumably (though really, search me) to keep them happy and willing to leave their deposits in place (?).

      • Richard1
        Posted March 19, 2013 at 9:10 am | Permalink

        I think you are right, I heard that after making this post – I didn’t check because it seemed so obvious the haircut would also apply to bondholders. It is an incredible proposal. Of course all creditors should be hit, with protection only for smaller accounts which have previously been guaranteed.

  39. TGod
    Posted March 17, 2013 at 5:05 pm | Permalink

    This has just greatly increased the risk of having any savings in a UK or European bank. With the socialists certain to return to power here in 2015 finding a safer home for my savings in the next 2 years is now essential.

    Government sponsored inflation is bad enough but state confiscation is beyond a joke.

  40. Posted March 17, 2013 at 5:28 pm | Permalink

    Talk about the pot calling the kettle black.

    This is what HM Government has been doing for some time now.

  41. uanime5
    Posted March 17, 2013 at 5:30 pm | Permalink

    Cyprus needs to bailout their banks and the way proposed by the Cypriotic Government is to tax savers. It isn’t the fault of the EU that the banks in Cyprus needed to be bailed out or that the Cypriotic Government chose to tax savers, rather than raise taxes.

    Also the only banks that are affected are the ones on Cyprus, so it’s unlikely to lead to a fight of capital from one bank on Cyprus to another.

    • Leslie Singleton
      Posted March 18, 2013 at 6:32 pm | Permalink

      unanime–As usual it would be difficult for you to be more wrong. It is the very existence of the EU and what it has done that has put Cyprus where it is. There is no way Cyprus would be in this extremely serious muddle if there had never been an EU. The proximate cause of Cyprus’s problems is their (understandable in the context of the EU dream, now turned in to a nightmare) lending to failed-State Greece which is their to-them-huge neighbour. Knowing you, you are going to say that Greece’s problems (and those of the other bailouts) had nothing to do with the EU and the wretched Euro which caused borrowing and lending in various countries at a single one-size-fits-all highly inappropriate rate for most. The EU and the Euro are so far from being blameless that your comments aren’t very funny.

    • Edward2
      Posted March 18, 2013 at 7:45 pm | Permalink

      I admire your optimism, and like you I hope there will not be a run on EU banks as a result of this sudden theft of depositors money in Cyprus, but I would ask you to consider, if you were holding a large sum of money in a Greek bank which represented your life savings, would you still keep it there, or would you transfer it into a bank in the USA or the UK just in case?

  42. Martin
    Posted March 17, 2013 at 5:53 pm | Permalink

    The other angle is the implications for those who for whatever reason deposit huge amounts in banks in small/micro states.

    Up until now these banks despite having huge deposits relative to the size to the host state have been assumed to be safe by association with a bigger country/currency area.

    There have been concerns that other Euro Zone taxpayers should have to bail out some of the depositors in Cyprus.

    There are of course some offshore Sterling banks both in and out the EU. What would folk in this country say if the British taxpayer was expected to take all of the hit on any hopefully hypothetical bail out?

  43. Nick
    Posted March 17, 2013 at 6:05 pm | Permalink

    And that’s the plan in the UK.

    Pillage the state second pension.

    Won’t stop the fraud.

    With the ONS putting the increase in the state pension debts at 736 billion a year, its going to happen here.

    No doubt MP exempted or given warnings to get out early. e.g. ELAS.

  44. Brian Tomkinson
    Posted March 17, 2013 at 6:11 pm | Permalink

    ” Heavily indebted governments regularly pillage the money of savers.”
    Our government is no exception but this if it goes through is taking a massive risk that there won’t be a run on banks throughout the eurozone. It is almost as though those making the decisions in the EU and the IMF intend to bring down all the banks, for that is where they are heading. Didn’t they notice what happened here with Northern Rock and the consequences that followed? These people are evil and it is beyond comprehnesion that you and your party should want anything whatsoever to do with them let alone pretending to renegotiate terms of membership.

  45. Andy
    Posted March 17, 2013 at 6:24 pm | Permalink

    Hi John,

    If this is a legitimate tax in Cyprus, why is the government going to “compensate” its staff for any loss? Basically that’s UK taxpayer money going to Cyprus bailout.

  46. Normandee
    Posted March 17, 2013 at 7:19 pm | Permalink

    Why is it everytime I post on your site I have to send a second to make the first one appear ?

  47. Bazman
    Posted March 17, 2013 at 7:42 pm | Permalink

    Many of the savers in Cyprus are Russian, so ironically it looks like Russia and fate are following them. Ram it.

    • Edward2
      Posted March 18, 2013 at 7:52 pm | Permalink

      Baz, this is a seperate issue.
      If there is money held in Cyprus banks which has been gained by illegal activity then that needs to be dealt with.
      But the ability of the State to suddenly take 10% off all who have a bank account is a very worrying precedent.

  48. Elliot Kane
    Posted March 17, 2013 at 8:39 pm | Permalink

    I’m calling it Grand Theft Cyprus, after a series of video games where the protagonist is an amoral thug who just takes anything he wants from anyone he pleases.

    Of course, what the Cypriot government is doing is beyond the dreams of avarice of a petty thug, but the mentality is surely the same.

    The most disgusting example of outright government theft in living memory.

  49. Andy
    Posted March 17, 2013 at 8:40 pm | Permalink

    Any chance of some legislation to prevent this happening in the UK?

    Framed in such a way that any government who wanted to do similar would need to overturn the legislation before they could do so, giving us all plenty of warning of what was coming? It should apply to savings, ISA & Pensions……

  50. Andy
    Posted March 17, 2013 at 10:09 pm | Permalink

    At least Cyrus are being up front and telling people what they will be doing. The UK government has been doing for years e.g interest on savings, reducing pensions by changing the indexation from RPI to CPI, quantitive easing, false inflation figures. I rest my case. As a former Tory voter, pensioner and saver I have been let down and should have left our country many years ago.

  51. Monty
    Posted March 17, 2013 at 10:38 pm | Permalink

    Imagine what the outcome might be, if that happened here. They have simply sliced a 10% cut out of every account in credit. But that takes no account whatsoever of counterbalancing liabilities.
    For example, some of us have long term fixed interest accounts to act as repayment vehicles for interest only mortgages. Imagine the results if 10% of your fund was confiscated overnight? There are many instances in our lives when we are in a period of transition, such as moving house, or selling one business to finance buying another, or liquidating assets due to divorce, or liquidating assets as executors of a will. There is money in an account that is actually already committed, binding contracts with third parties have been signed. An overnight government raid could leave people insolvent.

    Interest rates for savers are already dire. Now there is the added disincentive of significant risk for savers. If your money, or your gold sovereigns, are stuffed in the mattress, the government can’t just order the banks to steal it on their behalf.

    • Edward2
      Posted March 18, 2013 at 7:57 pm | Permalink

      Indeed Monty
      There was an example I listened to today, of a man who was in the process of conveyencing the sale of his house and was buying another property.
      This meant he had the proceeds of his old home together with the additional funds needed to purchase the new property in a Cyprus account just at the wrong moment.
      He said this has cost him nearly 50000 euros and left him now unable to complete the contract

  52. RB
    Posted March 17, 2013 at 11:14 pm | Permalink

    QE and inflation and paltry interest rates on deposits do the same. Maybe people here will now start to realise that they take this sort of hit every year in this country with QE, interest rate policy and the fictional official inflation figures. The only difference is that here the confiscation is slightly more subtle.

    But this Cyprus “levy” is as about as overt and in your face as it could be – direct overnight confiscation only two weeks after your own president assured you it would never happen. Very dangerous and shows, yet again, if any more evidence were needed, that EU politicians, much as they think or wish otherwise, are not in control of their own countries or the fates of the people they are supposed to serve.

    I hope the Cypriots tell the elites and politicians where to get off in the most robust terms.

  53. Posted March 17, 2013 at 11:47 pm | Permalink

    Let’s hope that the Osborne and any potential Chancellors such as Balls or Cable don’t get a similar idea.
    I don’t think the action in Cyprus will encourage the ordinary person to move his savings to another bank, I suspect that most will keep cash or if they know how, they will buy gold, something that I now wish I’d done years ago.

  54. matthu
    Posted March 18, 2013 at 12:04 am | Permalink

    On Monday, February 4 at the Royal Society, David Cameron gave a very important speech about energy efficiency at the launch of the DECC’s Energy Efficiency Mission. It is quite astonishing that neither No. 10 nor DECC have published this speech on their websites…. In any case, here is the speech in full. It makes for very interesting reading:

    Charles Clover in the ST writes that Cameron still has a green streak that he’s desperate to hide from his party and particularly from prospective voters who might be thinking of switching to UKIP. Hence the great reluctance to publicise this speech.

    Clover claims that No 10 is confused, even panicky about how to reconcile the past and the present. Hence the reason why this speech – about the greenest economies being the ones that would be most likely to prosper – has disappeared almost without trace.

    Fortunately, we can now see what Mr Cmeron really thinks about energy policy.

    • oldtimer
      Posted March 18, 2013 at 6:41 pm | Permalink

      Thank you for posting that link. It is one thing to aim to be energy efficient. It is quite another to choose means that render your economy price uncompetitive. That is what Cameron is doing.

      There is no shortage of energy sources; their use depends on whether the price covers more than the cost of their extraction. Cameron is deluded about the efficiency of wind power. He will be the ruin of the nation – along with Miliband, Clegg and their supporters.

  55. Mark
    Posted March 18, 2013 at 1:26 am | Permalink


  56. Steve Cox
    Posted March 18, 2013 at 6:32 am | Permalink

    A one-off levy on all savers to help fund government over-spending – that must sound like Nirvana to many politicians. I wonder if Mr Osborne has already had a chat with Mr Carney about this brilliant idea? Will we see it in the budget? After all, savers tolerate 5% inflation because most of them see that the nominal amount of money in their bank account is unchanged, so it’s only a small step further to confiscating some of the principal as well. And while we’re at it, why not introduce a French-style wealth tax, say 1% of all your assets per year? I should think that Mr Osborne will be salivating at the prospect.

    Seriously, the latest forecasts show that the UK deficit next year as a % of GDP will be larger than Greece’s. You don’t have to be Milton Friedman to see where this is heading. It’s best to put your money into a safer, low inflation currency in a country with strong banks and a healthy respect for individuals’ wealth. Anyone for Singapore dollars?

  57. Posted March 18, 2013 at 7:37 am | Permalink

    Forcing depositors to take a hair cut is clearly wrong in that it breaks the conditions on which deposits were originally made. On the other hand I’m not 100% sympathetic with depositors.

    What depositors want is interest, and that can only be obtained by lending their money on in ways that are not 100% safe. And when that risk doesn’t pay off, depositors expect taxpayers to rescue them.

    Conclusion: depositors have been ripped of over the last 48 hours in Cyprus, but depositors themselves have been in the business of ripping others off for decades.

      Posted March 18, 2013 at 8:46 pm | Permalink

      Bizarre logic Ralph.

  58. Richard1
    Posted March 18, 2013 at 8:54 am | Permalink

    I posted earlier to the effect that this is tough but whats the alternative given Cyprus & its banks are bust? Now I read (should have checked first) that bondholders are to be exempted from this bail-in. That’s amazing if so & you would have thought if Cyprus has any worthwhile legal system its open to challenge. Also the EU has been very unwise reneging on its promise of a guarantee up to €100,000. There needs to be a proper resolution regime for bust banks: shareholders are wiped out; all creditors participate in a bail-in and get shares in exchange for their positions. Possible protection by Govts of small depositors.

  59. Barry Sheridan
    Posted March 18, 2013 at 10:02 am | Permalink

    Dear Mr Redwood, this is just another step in the ratchet like destruction of sound money. Governments of every hue in just about every nation are united in what has become a relentless quest for revenue. What they will do has no limits, any promises to the contrary being worthless. Cyprus will be replaced by others doing worse in due course.

  60. Atlas
    Posted March 18, 2013 at 10:58 am | Permalink

    The Eurozone’s actions show how to create a bank run – ie, how to make a crisis into a disaster.

    We need your Mandate Referendum to get out of this EU hell-on-earth.

  61. Mark
    Posted March 18, 2013 at 12:10 pm | Permalink

    cookie 2

  62. uanime5
    Posted March 18, 2013 at 3:18 pm | Permalink

    John I’ve noticed that you haven’t moderated my comment where I point out that this tax on depositors was designed by the Cypriot Government, not the EU; yet found time to moderate most other posts. Any particular reason why you missed my comments?

    • Mark
      Posted March 18, 2013 at 5:54 pm | Permalink

      The site is still having problems with cookies.

  63. Dennis
    Posted March 18, 2013 at 3:31 pm | Permalink

    Better to let the government tax your savings at 10% than buying gold and lose 20% unrecoverable VAT when you want to sell it.

  64. Mactheknife
    Posted March 18, 2013 at 7:51 pm | Permalink

    Time for a Swiss bank account I think. Contrary to popular myth it only takes a few quid to open one up. Get your savings out of EU control now – the money grab is coming to a country near you.

    Germany has effectively decided to stop funding the Eurozone and supporting the Euro – its now a matter of time before other governments follow suit. I’m sure Labour and Ed Balls are watching closely.

  65. Lindsay McDougall
    Posted March 19, 2013 at 7:10 pm | Permalink

    Spot on. You omitted to say that the UK government is one of those robbing savers by inflation, but I am sure the thought was there. The reality certainly is.

One Trackback

  1. By billige lån on April 11, 2013 at 3:10 am

    billige lån…

    Savers mugged by EU in Cyprus – no surprise there then…

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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