While markets may have been spooked the last few days by the Eurozone's bailout of Cyprus, that has more to do with the EU and IMF making a meal of it rather than the economic significance of the country, according to Haig Bathgate. Cyprus is a fraction of the Eurozone's economy (just 0.2%), and tiny when compared even to Greece, so its impact in contagion terms is limited.
That's not to say that the bailout plan has been an example of how to successfully and calmly deal with the issue – the decision to impose a tax on bank deposits seemed grossly unfair (and an incentive for European savers to keep money under their mattresses rather than in banks). And the subsequent rejection of the deal by the Cypriot parliament has thrown the whole issue into confusion.
The reluctance on the part of core European states to fully underwrite Cyprus is understandable though. With Cyprus having emerged as a tax haven for wealthy Russians, EU members aren't keen to provide money to effectively bail out savers from outside the union.
Haig Spoke about this issue, and also commented on the budget on BBC Radio's Good Morning Scotland.
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