Tags: cyprus | bank | scare | euro

British Journalist Andrew Neil: Cyprus-like Bank Scares Spread in Eurozone, but Euro Itself Is Safe

By Greg Richter and Kathleen Walter   |   Friday, 29 Mar 2013 07:25 PM

With the precedent set in Cyprus, Europeans are right to worry about seeing their bank accounts raided, influential British journalist Andrew Neil said.

“This is terrifying Europe,” Neil said. “People are wondering, “Well, if a government can come and just raid my bank account, why should I keep money in the bank?’”

Would that lead to everyone stuffing their savings in their mattresses? At the very least, Neil told Newsmax TV in an exclusive interview, people might move money to banks that are more solvent. “It would be a flight to quality.”

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People in Italy, Spain and even Ireland, are worried that if the eurozone can demand a government take a portion of private bank accounts in Cyprus, they can do it in other countries with struggling economies.

France, too, Neil said “is in real trouble.”

Editor’s Note: Put the World’s Top Financial Minds to Work for You

The French economy is stagnating and unemployment is reaching record highs, Neil told Newsmax TV. And the government accounts for 56 percent of gross domestic product (GDP). “It’s essentially a socialist economy.”

There is concern that France is stuck “flatlining” for the foreseeable future, Neil says. “It doesn’t know how to get out of it, and if there is a panic on the banks, it will hit the French banks.”

Great Britain’s economy is flatlining as well, Neil said. He blames the U.K.’s problems on a lack of supply-side reforms. “It’s basically gone for austerity, and the problem is, the austerity isn’t working. British wages are stable, Neil said, but are being eaten up by inflation.

As a result, people have stopped spending.

The Conservative Party coalition is running out of time, he warned.

“The next election is 2015, and if we don’t start to see signs of growth in the economy, sometime by the end of this year at the latest then it will be too late and they’ll have to go to the country essentially with a record of economic failure.”

Neil is critical of the European Parliament members, who this week proposed a 9.5 billion pound budget increase despite many member states taking difficult steps to reduce spending.

The Germans, British, Dutch and Scandinavians are working to stop a big budget hike, Neil said, “but it’s like little Dutch boy with his finger in the dike, you put your finger into one hole in the dike and suddenly the water comes out elsewhere.”

So, will Britain remain in the European Union?

Not unless Conservative Party Prime Minister David Cameron wins re-election, Neil noted.

And that looks like a longshot. Cameron would have to go to the eurozone and demand Britain get back a lot of the powers it has ceded to the eurozone.

The Labor Party has no plan to allow a vote.

“My guess would be if there was a referendum now on the existing terms of membership, British people would probably vote to leave it,” Neil said.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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