Cyprus counterintuition part two: "Britain's next"

Are we heading down the same road?

I've already touched on one counterintuitive claim about Cyprus – that, far from being the Germans crushing the little guy, a wealth tax is actually the most progressive way out of the hole – but here's another one: Cyprus isn't that unique at all.

The Independent's Ben Chu turns against the prevailing trend, which is to argue that Cyprus, with its massive influx of questionable foreign funds, extended and deliberate exposure to Greek banks, tiny and inflexible economy, and a currency which it has no say in, is one-of-a-kind. Instead, Chu argues, there's someone who should be watching carefully: us.

We’ve nothing to be smug about here in Britain.

This chart (below) from Albert Gallo, an analyst at RBS, shows that we’re not that far behind. Despite all the deleveraging of recent years our banking sector still has assets and liabilities equal to 450% of our GDP.

Remember this next time you hear from one of the banking industry lobbyists how vital it is for the UK’s economic future to have a massive banking sector. Remember Cyprus.

Chu is slightly channeling Osborne, there (which isn't a nice thing to say of anyone, and I'm sorry). Our Chancellor made one of the earlier comments comparing Britain to Cyprus, and was pilloried for it. To be fair to Chu, Osborne's claim, that Cyprus is "what happens if you don’t show the world that you can pay your way" and is why Britain has "got to retain the confidence of world markets", is utter nonsense, while Chu's point is more interesting.

The problems in Cyprus have literally nothing to do with retaining the confidence of the world markets. Instead, have to do with buying a crapload of Greek debt in 2007, and then having a banking sector which owes billions in a currency Cyprus doesn't control.

On the face of it, that's not a circumstance which applies to Britain either. But the other aspect of the Cypriot problem is that the size of the country's banks is completely out of proportion two the size of the country's economy, and, yes, the UK's banking sector is similarly bloated – though still only half the size of Cyprus's as a proportion of GDP. I made a similar comparison in the heady days of 2011, pointing out that the UK is more similar to pre-crisis Iceland than Greece.

But the comparison just doesn't hold water beyond that. Because Cyprus's problem isn't just a bloated banking sector – it's also all those stupid moves its banking sector made, and the fact that Cyprus doesn't actually control the currency it now needs to recapitalise the banks into. (It's also, more technically, the fact that most of Cyprus's domestic law bonds are held by the Cypriot banks, which renders a partial default counter-productive). As a result, the real comparison between the UK and Cyprus is this one, from the FT's Joseph Cotterill:

That's the cost of fixing the banks' mistakes as a proportion of GDP. Cyprus is having to spend 60 per cent of its GDP on that. For comparison, that is roughly equal to America having to spend $9trn, almost 400 times the cost of TARP.

Cyprus is in a uniquely shitty situation. It's a cautionary tale for having banking debt's seven times higher than GDP, but it's more a cautionary tale about not being Cyprus.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The Telegraph’s bizarre list of 100 reasons to be happy about Brexit

“Old-fashioned light bulbs”, “crooked cucumbers”, and “new vocabulary”.

As the economy teeters on the verge of oblivion, and the Prime Minister grapples with steering the UK around a black hole of political turmoil, the Telegraph is making the best of a bad situation.

The paper has posted a video labelled “100 reasons to embrace Brexit”. Obviously the precise number is “zero”, but that didn’t stop it filling the blanks with some rather bizarre reasons, floating before the viewer to an inevitable Jerusalem soundtrack:

Cheap tennis balls

At last. Tennis balls are no longer reserved for the gilded eurocrat elite.

Keep paper licences

I can’t trust it unless I can get it wet so it disintegrates, or I can throw it in the bin by mistake, or lose it when I’m clearing out my filing cabinet. It’s only authentic that way.

New hangover cures

What?

Stronger vacuums

An end to the miserable years of desperately trying to hoover up dust by inhaling close to the carpet.

Old-fashioned light bulbs

I like my electricals filled with mercury and coated in lead paint, ideally.

No more EU elections

Because the democratic aspect of the European Union was something we never obsessed over in the run-up to the referendum.

End working time directive

At last, I don’t even have to go to the trouble of opting out of over-working! I will automatically be exploited!

Drop green targets

Most people don’t have time to worry about the future of our planet. Some don’t even know where their next tennis ball will come from.

No more wind farms

Renewable energy sources, infrastructure and investment – what a bore.

Blue passports

I like my personal identification how I like my rinse.

UK passport lane

Oh good, an unadulterated queue of British tourists. Just mind the vomit, beer spillage and flakes of sunburnt skin while you wait.

No fridge red tape

Free the fridge!

Pounds and ounces

Units of measurement are definitely top of voters’ priorities. Way above the economy, health service, and even a smidgen higher than equality of tennis ball access.

Straight bananas

Wait, what kind of bananas do Brexiteers want? Didn’t they want to protect bendy ones? Either way, this is as persistent a myth as the slapstick banana skin trope.

Crooked cucumbers

I don’t understand.

Small kiwi fruits

Fair enough. They were getting a bit above their station, weren’t they.

No EU flags in UK

They are a disgusting colour and design. An eyesore everywhere you look…in the uh zero places that fly them here.

Kent champagne

To celebrate Ukip cleaning up the east coast, right?

No olive oil bans

Finally, we can put our reliable, Mediterranean weather and multiple olive groves to proper use.

No clinical trials red tape

What is there to regulate?

No Turkey EU worries

True, we don’t have to worry. Because there is NO WAY AND NEVER WAS.

No kettle restrictions

Free the kettle! All kitchen appliances’ lives matter!

Less EU X-factor

What is this?

Ditto with BGT

I really don’t get this.

New vocabulary

Mainly racist slurs, right?

Keep our UN seat

Until that in/out UN referendum, of course.

No EU human rights laws

Yeah, got a bit fed up with my human rights tbh.

Herbal remedy boost

At last, a chance to be treated with medicine that doesn’t work.

Others will follow [picture of dominos]

Hooray! The economic collapse of countries surrounding us upon whose trade and labour we rely, one by one!

Better English team

Ah, because we can replace them with more qualified players under an Australian-style points-based system, you mean?

High-powered hairdryers

An end to the miserable years of desperately trying to dry my hair by yawning on it.

She would’ve wanted it [picture of Margaret Thatcher]

Well, I’m convinced.

I'm a mole, innit.