Cyprus

On this week's edition of The Spectator Podcast, we discuss Theresa May's double bind in Edinburgh and Brussels, Milton's cultural relevance in 2017, and the slaughter of Cypriot songbirds. First, Lara Prendergast spoke to James Forsyth about his cover piece in this week's magazine. Have Theresa May's negotations with the European Union been hamstrung by this latest intervention from Holyrood? And will she be able to find a version of Brexit that soothes the fears of pro-Remain Scots? Time will, of course, tell, but in the meantime James joins the podcast along with the Spectator's Scotland Editor, Alex Massie. As James writes in his piece this week: "Theresa May is a cautious politician.

Home In the Budget, George Osborne, the Chancellor of the Exchequer, kept talking of the ‘next generation’. He outlined cuts of £3.5 billion in public spending by 2020, to be ‘on course’ to balance the books. Personal allowances edged up for lower taxpayers, with the higher-rate threshold rising to £45,000. A ‘lifetime Isa’ for under-40s would be introduced. Corporation tax would go down to 17 per cent by 2020. Small-business rate relief was raised: a ‘hairdresser in Leeds’ would pay none. Fuel, beer, cider and whisky duty would be frozen. To turn all state schools into academies (removing local authorities from education), he earmarked £1.5 billion.

Home The all-party Foreign Affairs Committee urged David Cameron, the Prime Minister, not to press ahead with a Commons vote on British air strikes against Islamic State positions in Syria. At its conference, Scottish Labour adopted a policy of opposition to Trident renewal, though Kezia Dugdale, its leader, remained in favour, while the Labour party in the United Kingdom as a whole favoured retaining the nuclear deterrent, though its leader, Jeremy Corbyn, opposes it. Britain was smothered in fog, except in Wales, where temperatures on 1 November reached a record 22˚C. A man had his ear bitten off in a pub in Aberystwyth on Halloween.

From The Spectator, 7 November 1914: THE most important event of the week has been the declaration of war on Turkey by Britain. In the words of the London Gazette of Thursday: "Owing to hostile acts committed by Turkish forces under German officers, a state of war exists between Great Britain and Turkey as from to-day. Foreign Office, November 5th, 1914." The Gazette also contains an Order in Council annexing the island of Cyprus. The Order points out that the outbreak of hostilities annuls the Convention, Annexe, and Agreement made between us and the Turks in 1878. In addition, the British Fleet during the past week has been busily bombarding the forts at the mouth of the Dardanelles, apparently with good results.

This is probably the most self-indulgent column I’ve written. I hope not to make a habit of it. It’s an ode to — and something of a lament for — my own right arm. I was six when I fell off a small cliff above a disused railway embankment in Nicosia, Cyprus. The blue bicycle I was wheeling was new: a birthday present and my first bike. A novice, I let the back wheel slip over the edge — and if you’re holding the handlebars and the back wheel slides, a bicycle moves in counter-intuitive ways. Mine pulled me with it. I refused to let go. I came to in a heap, in the dust, bicycle beside me and blood everywhere. Two small Greek boys were staring at me in horror. I struggled to my feet.

The weather might not be what it once was, and the football season might start so quickly it feels like it has hardly been away, but there is one thing everyone can surely agree on about August. Nothing of any importance happens. As we head into the dog days of summer, everyone can sling their feet up on the desk and relax. All the people who really matter — the ones running the big corporations, the banks or the government — are off sunning themselves by a pool somewhere. As for the office, it’s about as busy as a job centre in downtown Athens. The only people left are the post boy and the interns busy updating their Facebook pages. It’s impossible to imagine anything of significance happening.

Analysts today are talking about the GDP of Cyprus falling by 20 per cent over the next four years, and stressing that this is a conservative estimate. This, and the attitude of the Church there, does make me wonder if the Cypriots might not reject the bailout again, revert back to the Cypriot pound and try and devalue their way to recovery. This could hardly be more painful than a bailout that will make credit nigh-on-impossible to obtain in Cyprus. The second thing is surely any company or institution with large cash reserves is moving them out of any bank in the Eurozone periphery. If, as the head of the Eurogroup has said, Cyprus is a template for dealing with failing banks, then no one should want to have more than €100,000 in anything but the strongest banks.

This picture is from a website for Cypriot homes:  you can buy a three bedroom apartment for £1.6mn.  Whoever owns that — property developer or individual and whichever bank lent them the money to develop or buy it — now risks being wiped out. And this is just the beginning. Here are a few thoughts on this situation. 1. The downfall. Cyprus was a problem amplified by political incompetence, a disaster that never should have happened.  The outlook is exceeding bleak for this small economy and the economic pain coming to the 800,000 inhabitants will be severe.  Why? Because the banking industry got so giant – at seven times the economy - and it is about to shrink rapidly.