The bailout of Cyprus is in doubt as the Cypriot parliament shocked EU officials by announcing that it would be holding a vote on the details of the €10 billion package.
With opposition against the EU and Troika growing among Cypriots it is thought that nearly half of the 56-seat parliament may opt to oppose the bailout, which is seen as vital to keep Cyprus in the Eurozone.
Petros Clerides said that the parliament must have a say on the bailout’s terms, which will devastate the Cypriot economy by inflicting huge losses on depositors at Laika and Bank of Cyprus. The islands church is also expected to lose €100 million leading to a crippling of its charity work. Green MP George Perdikis told the Cyprus Mail that he would vote against it to uphold the “freedom” of his country. “It is a crime to deliver Cyprus into the hands of the troika and allow it to become a colony.”
In a defiant statement, an alliance of the ECB, Commission and Eurogroup hit back saying that the “evidence is clear” that EMU crisis policies have been a success and recovery is in sight. “The Eurozone has shown a degree of resilience and problem-solving capacity that many observers and policy makers would not have predicted even a year ago.”
Economists and other organisations are finally beginning to challenge the European leadership’s false claims with them being flatly contradicted by the International Monetary Fund, which warned this week that the Eurozone remains “the epicentre of potential risk” in the world, and is endangering stability by dragging its feet on an EU banking union.
Steen Jacobsen from Saxo Bank accused EMU leaders of dangerous complacency. “Nothing they say is true. Reality has never been further away. It’s scary,” he said. “We think the Eurozone is in far worse shape than they realize. We will see contraction of 1% this year but it could be as bad as 2%.”
Italy’s economy is set to decline by 1.6% in 2013 and 1.2% in 2014, meagre growth is expected in 2015 but by that time the nation’s public debt level will soar to 142% of GDP. The picture for Spain and Portugal is even worse
As a result of the uncertainty in Cyprus and the ongoing stalemate in Italy over the presidential elections the Euro is weaker against the Pound and could decline further against the majority of its peers.
As of 11:30 am GMT
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8525
The Euro to US Dollar exchange rate is currently trading in the region of 1.3085
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2642
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5442