Posts in Category: Europe

Cyprus defends bailout deal amid recession fears 

Sunday, March 24, 2013 4:00:00 PM Categories: Europe

The government of Cyprus has defended a 10bn-euro bailout deal to save its banks from collapse, amid warnings the island faces deep recession. Laiki (Popular) Bank, the country's second largest, will be wound up, but small savers will be protected. Depositors with more than 100,000 euros ($130,000; £85,000), many of whom are Russian, face big losses.

Cypriot finance minister Michael Sarris said his country had avoided a "disastrous exit from the eurozone". But correspondents say Cyprus' economy will shrink sharply as offshore banking - its main industry - is effectively shut down.

President Nicos Anastasiades - who negotiated the deal with the "troika" of the EU, the European Central Bank and the IMF in Brussels - is to address the nation in the coming hours.

It is not clear when Cypriot banks will reopen, or when temporary restrictions on the movement of capital will be lifted.

Cyprus puts levy on bank accounts 

Sunday, March 17, 2013 4:10:00 PM Categories: Europe

People in Cyprus have reacted with shock to news of a one-off levy of up to 10% on savings as part of a 10bn-euro (£8.7bn; $13bn) bailout agreed in Brussels.  The controversial plan, negotiated with the European Union and International Monetary Fund, marks a radical departure from previous eurozone bailouts.

People with under 100,000 euros in their accounts would face a one-off levy of 6.75%, while anything above would get a one-time tax of 9.9%. Depositors would be compensated with the equivalent amount in shares in their banks. If it goes ahead, the levy would affect many non-Cypriots with bank accounts, including UK expatriates. However, depositors in Cypriot banks' operations outside the country would not face a levy.

If you have any concerns about this or would like to discuss it further please get in touch.

A few points of interest 

Tuesday, November 27, 2012 10:32:00 AM Categories: Economy Europe

A brief roundup of key events over the last few days:

  • Mark Carney has been named as the new governor of the Bank of England by Chancellor George Osborne. Mr Carney, the governor of the Canadian central bank, will serve for five years and will hold new regulatory powers over banks. He was a surprise choice for the head of the UK's central bank and had previously ruled himself out.
  • The UK economy grew by 1% between July and September, official figures have confirmed. The Olympic Games helped to boost growth over the summer. Compared with a year earlier, as opposed to the previous quarter, the economy contracted by 0.1%, whereas the previous estimate had shown flat growth.
  • Eurozone finance ministers and the IMF have reached a deal on an urgently needed bailout for debt-laden Greece. They have agreed to cut debts by 40bn euros ($51bn; £32bn) and have paved the way for releasing the next tranche of bailout loans - some 44bn euros.

A key week for the world's economies 

Monday, November 05, 2012 3:13:00 PM Categories: Economy Europe

According to some analysts, this week is "the most important week of the rest of 2012". A pretty bold statement but with issues in so many countries around the world it's not hard to see why.

Firstly, America has to decide who will be its president for the next four years; then you have the Chinese starting the formal handover to its new leaders; and then you have the central banks of the eurozone and the UK deciding whether they need to do more to support their fragile economies.

In other words, this week will help to determine the long-term economic direction of countries accounting for just over a quarter of global output.

And, as if that wasn't enough, the Greek parliament will also be voting on further budget cuts that will determine whether it can get the next tranche of the European-IMF rescue package.

All in all, quite a busy few days ahead......

Eurozone problems continue to provide market volatility 

Thursday, September 27, 2012 2:44:00 PM Categories: Europe

Spain is due to set out its austerity budget for 2013 later, against a backdrop of a deteriorating economy and 25% unemployment rate. Madrid is expected to outline 39bn euros ($50bn; £31bn) worth of savings, tax rises, and structural reforms. It comes amid further protests this week, and growing expectations that Spain will seek a bailout from its eurozone partners.

Stocks fell sharply on Wednesday, as markets were rattled by violent protests in Madrid and Athens, as well as a statement from the Spanish central bank that the country's economy had continued to shrink in the third quarter of the year.

However, the more optimistic sentiment was boosted on Thursday when the Greek finance minister, Yannis Stournaras, said that a "basic agreement" had been reached with lenders on the austerity measures required for the release of Greece's next tranche of bailout money.

Moody's lowers EU rating outlook to 'negative' 

Tuesday, September 04, 2012 11:40:00 AM Categories: Economy Europe

Moody's has lowered its outlook for the European Union's AAA credit rating to "negative" and warned that the bloc's rating could be downgraded. It said the move reflected the negative outlook for the ratings of the EU's key budget contributors.

Earlier this year, Moody's put ratings of Germany, France, Netherlands and the UK on a negative outlook. It said that these nations were all exposed to the region's debt crisis, hurting their creditworthiness.

The ratings agency said that in case of "extreme stress", the AAA-rated member states were more likely to service their own debt obligations rather than "prioritise their commitment to backstop the EU debt obligations".

Markets react to ongoing Spainish issues 

Monday, July 23, 2012 12:22:00 PM Categories: Europe

European and global markets have fallen on fears Spain's indebted regional governments will push the country into seeking a bailout.

On Friday, Valencia, one of the country's 17 regions, asked the central government for a financial lifeline, and on Sunday, the Murcia region said it was considering following suit. There is speculation that other regions are also considering seeking assistance.

There was more bad news for Spain today when the Bank of Spain said the country's economy contracted by 0.4% in the three months to the end of June, having shrunk by 0.3% in the previous quarter.

European stock markets fell on Monday morning, with Spain's main Ibex share index down more than 5%.

Greece is the word.... 

Monday, June 18, 2012 3:09:00 PM Categories: Europe

on everyone's lips at the moment. After a long and drawn out election process the Greeks have shown support for its continued membership of the eurozone, with pro-austerity party New Democracy winning by a narrow margin and they will now attempt to form a coalition government. Leftist political party Syzira, which had been one of the most vociferous opponents of austerity measures, came second-placed.

The results have allayed fears of an imminent exit from the euro by Greece, with markets rising in early trading but falling back over the day to show little gain at the time of writing. This shows that doubts still remain about the state of many European banks so don't get that bunting and balloon set out again just yet.

As always, if you would like to discuss this further please get in touch.

The pain in Spain.... 

Wednesday, June 13, 2012 9:33:00 AM Categories: Europe

You have probably seen the news over the last few days that Spain's banks are to receive a bailout of up to 100 billion euros to help keep them away from insolvency. This has been welcomed by a market that is desperate for good news on the debt crisis. It comes in the same week as the re-run of the Greek election and the same month as an important EU Summit on 28-29 June. If Greece delivers a moderate government that accepts the bailout terms the rally may be prolonged but the more important event is whether the policy makers have the will to make bolder and more significant policy measures than has been evident in the Spanish bailout.

As always, if you have any concerns about this or would like to discuss it further please get in touch.

European concerns? 

Wednesday, June 06, 2012 11:20:00 AM Categories: Europe

There continues to be ongoing speculation about the future of the eurozone due to the problems in Greece and how this is spreading to areas such as Portugal, Spain and Italy. There have been reports in the last few days that Spain was seeking an immediate bailout from eurozone funds but this has been denied by Spain's economy minister.

Clearly this level of concern over Europe has had an effect on global stock markets, with the FTSE 100 dropping 6.8% in the month of May alone.

If you are concerned about this or wish to discuss your options please get in touch through the Contact Us tab at the top of the page.