We’re about to break up for Easter. I don’t know about you, but I’m ready for the holiday. It’s been a long, dark winter and I’d like some warm weather. But right now South Milford is twinned with Irkutsk and there doesn’t seem much sign of change…
No doubt someone reading this blog will be escaping to Cyprus. Up until about ten days ago they’d have been looking forward to it. Checking their iPhone and gloating about the temperature in Nicosia. Wondering how many pairs of swimming trunks to take…
And now – for obvious reasons – they’ll be feeling rather different. Never mind the swimming trunks, how much cash can I take? Is it safe to take that much cash? And what will I find when I get there?
Last week we had the Budget. But frankly George Osborne’s announcements – welcome as some of them were – are just a sideshow compared to what’s happening in the Mediterranean.
I’ve been fascinated and horrified in equal measure as the Cyprus/EU/Russia saga has unfolded. I don’t often write about wider global affairs but this is important. And it leads me to a blog which I think is simultaneously one of the most worrying and one of the most uplifting that I’ve written.
As you know, the Cypriot banking industry has boomed – expanded to be eight times the gross domestic product of the island. Much of it has been based on the deposits of wealthy Russians: opinions vary on how much they have deposited in Cyprus, but it runs into many, many billions. Whatever estimate you’ve seen, I suspect it’s an under-estimate.
And then Cyprus gets into trouble. It has to go to the EU for a bailout. “Fine,” says the Troika (the EU, the European Central Bank and the IMF), “No problem at all. We’ll give you the money but we need a deposit. And that will come from a levy on bank savings.” Cue uproar; cue the Cypriot people rushing to the cash machines; cue dark mutterings in Moscow. And cue the feeling that maybe, just maybe, Germany is prepared to see Cyprus go bust – ‘pour encourager les autres’ as their next door neighbours would say.
But no. As I write (on Monday afternoon), a last minute deal has – to no-one’s surprise – been agreed. It will involve a levy on anyone with more than €100,000 in savings. This will ‘catch’ virtually every Russian depositor in Cyprus – and Russia has retaliated by threatening reprisals against German firms exporting to, or operating in, Russia.
Europe is in a mess – and it’s going to get messier.
Meanwhile China waits patiently in the wings. Let me idly play with numbers for a minute. The most reliable estimate I can find (the Financial Times) puts China’s cash reserves at $3.3 trillion dollars. To put that in perspective, the rumoured Qatari bid put a value of $10bn on Marks and Spencer’s. Manchester United is worth a paltry $1.5bn. The market capitalisation of Shell, the biggest company in the FTSE-100 index is just over $200bn.
The simple fact is that China could buy vast chunks of Europe’s core manufacturing businesses and some of its most iconic names without batting an eyelid.
I find this profoundly depressing. But at the same time it offers the biggest opportunity any of us could ever wish for. Because the only way Europe is going to get out of the current mess is to build businesses and create wealth. And the politicians and the bureaucrats are not going to do that. You are.
Cometh the hour, cometh the man. Well I think the hour has come, and I think the entrepreneur is the man. So as David Steel once told the Liberal party to go back to their constituencies and prepare for Government, I think the entrepreneur needs to go back to his business and prepare to save the continent.
Entrepreneurs are needed more than they have ever been needed before. It surely cannot be beyond the wit of Government to realise this, and to create the conditions in which entrepreneurs can work effectively.
Have a brilliant Easter. You – and your businesses – inspire me. But there is work to be done…