In the wake of Cyprus, the euro can survive

Everyone hold your breath... and then chill out and have a Easter egg.

This weekend you should spend as much time as possible holding your breath or crossing your fingers. Storm clouds are gathering throughout Europe and the downpour could begin as early as Tuesday. First of all there is the ongoing Cypriot tragi-comedy; tragic for innocent islanders and retirees who just saw the island as a nice place to keep their savings and see out their days, comedy with regard to the performance of the Troika; judge, jury and executioner in the form of the European Central Bank, (ECB), the International Monetary Fund and European Commission.

Secondly, there is the Italian political imbroglio, which this week descended into chaos as Grillo, the leader of the neo-anarchist Five Star Movement, called M. Bersani and Berlusconi something almost unprintable and Bersani said, “only an insane person would want to govern this country, which is in a mess and faces a difficult year ahead”, following his failed attempt to comply with the President’s request to form a government, raising the likelihood of months of uncertainty and new elections. Rumours abound of a possible credit rating downgrade over the weekend.

Thirdly, Slovenia is quietly imploding and nudging its way onto traders’ screens. The political situation is not much better than Italy’s and the banking system has bad loans equal to 20 per cent of GDP. These resonances caused its government bond yields to soar this week, following the Cypriot "solution".

Along with these near-term, possibly explosive threats, the Eurozone has to continue to cope with the slow-burn problems of Spain, which is failing to meet deficit reduction targets and, perhaps most frighteningly, France’s slowdown. Throw in the chasm opening up between President Hollande and Chancellor Markel and the Euro’s prospects may seem dire.

Notwithstanding all of the above, I remain cautiously, but resolutely certain that the Euro can survive, at least for the foreseeable future - meaning the next three years, say.

If we have learnt nothing else over the last few years it should be that the political will to ensure its survival is enormous and that the ECB is prepared to almost totally divorce itself from its Bundesbank heritage to play its part. Witness the protest resignations of two senior Bundesbankers from the ECB since the crisis broke. Merkel will masterfully persuade the German people to provide just enough largesse to southern Europe, without enraging her populace beyond breaking point, she will probably bend just enough on austerity to satisfy Hollande’s calls for growth, and after the elections she will probably even support the issuance of joint and several Eurobonds, which put all nations on the hook to the same degree. Finally, this Thursday, Draghi will give a masterful performance at the post-ECB meeting press conference, in an echo of his famous "whatever it takes" speech last year.

Cyprus can become a tragic memory, Italy is rich and will survive, Slovenia is small, and Spain and France will slowly respond to growth enhancement. Meanwhile, the US will surprise us all with its outperformance this year, once again acting as an economic locomotive.

So, let your breath out and have an Easter egg, if that is your fancy.

Look at these lambs. They're not worried about Cyprus. Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

Photo: Getty
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Brexit Big Brother is watching: how media moguls control the news

I know the Daily Mail and the Daily Telegraph well, and I don’t care to see them like this.

It would take a heart of stone now not to laugh at an illustration of Theresa May staring defiantly out at Europe from the British coast, next to the headline “Steel of the new Iron Lady”.

Those are, however, the words that adorned the front page of the Daily Mail just five months ago, without even a hint of sarcasm. There has been so much written about the Prime Minister and the strength of her character – not least during the election campaign – and yet that front page now seems toe-curlingly embarrassing.

Reality has a nasty habit of making its presence felt when news is remorselessly selected, day in and day out, to fit preconceived points of view. May and her whole “hard Brexit” agenda – which the public has now demonstrated it feels, at best, only half-heartedly enthusiastic about – has been an obsession of several British newspapers, not least the Daily Mail and the Daily Telegraph.

I know these papers well, having spent the best part of a quarter-century working for them, and I don’t care to see them like this. When I worked there, a degree of independent thought was permitted on both titles. I joined the Telegraph in 2002; at the time, my colleagues spoke with pride of the paper’s tolerance to opposing views. And when I was at the Mail, it happily employed the former Labour MP Roy Hattersley.

Would I be able to run positive stories about, say, my mate Gina Miller – who successfully campaigned for parliamentary scrutiny of the Brexit process – in the Telegraph if I were there today? Or at the Daily Mail? Dream on: it’s two minutes of hate for that “enemy of the people”.

Morale in these newsrooms must be low. I am finding that I have to allow an extra half-hour (and sometimes an extra bottle) for lunches with former colleagues these days, because they always feel the need to explain that they’re not Brexiteers themselves.

Among the Telegraph characters I kept in touch with was Sir David Barclay, who co-owns the paper with his brother, Sir Frederick. Alas, the invitations to tea at the Ritz (and the WhatsApp messages) came to an abrupt halt because of you-know-what.

I don’t think Sir David was a bad man, but he got a Brexit bee in his bonnet. I was conscious that he was close to Paul Dacre, the editor of the Daily Mail, and both had cordial relations with Rupert Murdoch. It became clear that they had all persuaded themselves (and perhaps each other) that Brexit suited their best interests – and they are all stubborn.

It seems to me unutterably sad that they didn’t sound out more of their factory-floor staff on this issue. We journalists have never been the most popular people but, by and large, we all started out wanting to make the world a better place. We certainly didn’t plan to make it worse.

People used to tell me that papers such as the Daily Mail and the Telegraph changed because the country had but, even in the darkest days, I didn’t agree with that premise. We are in the mess we’re in now because of personalities – in newspapers every bit as much as in politics. The wrong people in the wrong jobs, at the wrong time.

Would the Daily Mail have backed Brexit under Dacre’s predecessor David English? It is hard to imagine. He was a committed and outward-looking Europhile who, in the 1970s, campaigned for the country to join the EU.

I can think of many Telegraph editors who would have baulked at urging their readers to vote Leave, not least Bill Deedes. Although he had his Eurosceptic moments, a man as well travelled, compassionate and loyal to successive Conservative prime ministers would never have come out in favour of Brexit.

It says a great deal about the times in which we live that the Daily Mirror is just about the only paper that will print my stuff these days. I had a lot of fun writing an election diary for it called “The Heckler”. Morale is high there precisely because the paper’s journalists are allowed to do what is right by their readers and, just as importantly, to be themselves.

Funnily enough, it reminded me of the Telegraph, back in the good old days. 

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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