Cyprus Banks Euro Tax Bail-Out is a Small-Scale Smash-and-Grab Compared to Britain’s Slow-Motion Bank Robbery!
- Cyprus banks euro tax bail-out is a small-scale smash-and-grab compared to Britain’s slow-motion bank robbery!
by Ian Cowie, http://www.telegraph.co.uk/
Outrage about the Cyprus banks euro tax bail-out should not be allowed to obscure the fact that millions of savers in British banks have already lost much more of the real value or purchasing power of their money to prop up financial institutions closer to home.
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Savers in British banks and building societies have been stealthily robbed of more than £43bn of the real value of their savings since the Bank of England froze interest rates at 0.5pc four years ago. That’s the total shrinkage of bank and building society depositors’ purchasing power caused by inflation exceeding frozen interest rates, according to calculations by the pressure group Save Our Savers, following similar calculations by Yorkshire Building Society that the average saver has lost £2,500 in real terms since the credit crisis began.
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Both figures have got much bigger than they were a couple of years ago, as inflation has continued to run ahead of interest paid on deposits. Pensioners have suffered even more because higher than average proportions of their fixed incomes are spent on food and fuel. They are the largely silent victims of the Bank of England’s policy of running negative real interest rates.
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But this slow-motion bank robbery is more difficult to describe than the short, sharp, smash-and-grab in Cyprus. So, despite the best efforts of this column to blow the whistle, more attention will be given to smaller losses for fewer people in Cyprus than millions of savers and pensioners who have lost much more in British banks and retirement funds.
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Suggested levies of 6.75 per cent of all deposits up to €100,000 (£86,500) and 9.9 per cent for larger deposits caused many savers in Cyprus to withdraw their money from banks over the weekend. More than 50,000 Britons are thought to have bank accounts in Cyprus, including about 3,000 members of the Armed Forces serving in the country. George Osborne, the Chancellor, has offered to compensate them if they are hit. Cypriot banks operating in this country are not affected.
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With commendable understatement, Mr Osborne told the BBC’s Andrew Marr Show: “It’s a difficult situation for people who live in Cyprus. For people serving in our military and our government out in Cyprus, we are going to compensate anyone affected by this bank tax – people who are doing their duty for our country in Cyprus will be protected from this Cypriot bank tax.”
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Elsewhere, Government sources stressed that deposits held in the London branches of Bank of Cyprus UK and Laiki Bank would not be subject to the new levy. Treasury sources said that “deposits in UK subsidiaries and branches [of Cypriot banks] aren’t affected” by the crisis.
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If only small savers with Britain’s high street banks and building societies could say the same. Nor are they the only victims to pay a high price for quantitative easing and QE’s aim of protecting over-stretched banks and borrowers at the expense of savers.
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