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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Jeremy Corbyn sat down on train he claimed was full, Virgin says

The train company has pushed back against a viral video starring the Labour leader, in which he sat on the floor.

Seats were available on the train where Jeremy Corbyn was filmed sitting on the floor, Virgin Trains has said.

On 16 August, a freelance film-maker who has been following the Labour leader released a video which showed Corbyn talking about the problems of overcrowded trains.

“This is a problem that many passengers face every day, commuters and long-distance travellers. Today this train is completely ram-packed,” he said. Is it fair that I should upgrade my ticket whilst others who might not be able to afford such a luxury should have to sit on the floor? It’s their money I would be spending after all.”

Commentators quickly pointed out that he would not have been able to claim for a first-class upgrade, as expenses rules only permit standard-class travel. Also, campaign expenses cannot be claimed back from the taxpayer. 

Today, Virgin Trains released footage of the Labour leader walking past empty unreserved seats to film his video, which took half an hour, before walking back to take another unreserved seat.

"CCTV footage taken from the train on August 11 shows Mr Corbyn and his team walked past empty, unreserved seats in coach H before walking through the rest of the train to the far end, where his team sat on the floor and started filming.

"The same footage then shows Mr Corbyn returning to coach H and taking a seat there, with the help of the onboard crew, around 45 minutes into the journey and over two hours before the train reached Newcastle.

"Mr Corbyn’s team carried out their filming around 30 minutes into the journey. There were also additional empty seats on the train (the 11am departure from King’s Cross) which appear from CCTV to have been reserved but not taken, so they were also available for other passengers to sit on."

A Virgin spokesperson commented: “We have to take issue with the idea that Mr Corbyn wasn’t able to be seated on the service, as this clearly wasn’t the case.

A spokesman for the Corbyn campaign told BuzzFeed News that the footage was a “lie”, and that Corbyn had given up his seat for a woman to take his place, and that “other people” had also sat in the aisles.

Owen Smith, Corbyn's leadership rival, tried a joke:

But a passenger on the train supported Corbyn's version of events.

Both Virgin Trains and the Corbyn campaign have been contacted for further comment.

UPDATE 17:07

A spokesperson for the Jeremy for Labour campaign commented:

“When Jeremy boarded the train he was unable to find unreserved seats, so he sat with other passengers in the corridor who were also unable to find a seat. 

"Later in the journey, seats became available after a family were upgraded to first class, and Jeremy and the team he was travelling with were offered the seats by a very helpful member of staff.

"Passengers across Britain will have been in similar situations on overcrowded, expensive trains. That is why our policy to bring the trains back into public ownership, as part of a plan to rebuild and transform Britain, is so popular with passengers and rail workers.”

A few testimonies from passengers who had their photos taken with Corbyn on the floor can be found here