An analyst explains how an alarmingly high level of unemployment has caused people in Portugal to withdraw deposits from bank accounts as the eurozone’s currency nears its end.
The economic crisis in Portugal has forced an increasing number of people in the recession-mired eurozone country to turn to food banks for help as unemployment levels tip over the edge. This comes as big savers in the largest bank of Cyprus face losses up to 60 percent, far more than initially estimated under the country’s EU-led bailout plan, causing masses of people to withdraw bank deposits in Cyprus and Portugal.
Press TV has conducted an interview with Robert Oulds, Director of the Bruges Groups from London to further discuss the issue. The following is a rough transcription of the interview.
Mr. Oulds welcome. People in Portugal are going to food banks. Is Portugal next in line after Cyprus?
Well very much so. The Portuguese banking system has been brought into question about its liability because the stealing of people’s deposits from Cyprus and the messages from the European Union that this is a future way of handling economic crises; will of course has meant that people are withdrawing their deposits from Portuguese banks in particular because Portugal is highly vulnerable.
Unemployment will be going up this year, peaking at 18 percent and possibly going beyond.
The unemployment level is getting alarmingly high, the economy will contract by nearly two and a half percent in 2013 and the banks in Portugal are really suffering and people will of course move their money out.
This is something that is happening under way at the moment and that of course will further bring into disrepute the Portuguese economy, which is really failing to serve its citizens’ needs.
Indeed. We heard that Cyprus imposed restrictions on people’s savings and depositors. How likely will other EU banks do the same and follow suit?
Well it’s the European Union that was forcing this upon depositors in Cyprus and it has been said that this will be a model that will be followed. So, it is quite likely that this could well happen again. It’s caused a great deal of harm to the Cypriot economy which are now facing really a generation now of growing unemployment and the declining economic growth and the same is happening in Portugal. That is quite likely the scenario that will come to pass. But, of course it will be a great shame because of course the people who are paying the price for this are of course ordinary people who, of course are losing their jobs and in many cases losing their homes because there’s no one to pay the mortgage.
There’s a great deal of economic harm that’s hitting Southern Europe which has been brought on by the austerity measures, pushed forward by the European Central Bank (ECB), the IMF (International Monetary Fund) and the European Union.
All it’s doing it’s not solving the debt problem, it’s actually making it worse and it’s actually creating alarmingly high unemployment, which will have future consequences for many years to come.
It’s interesting to know is any European Union country less vulnerable to this crisis?
Well the main countries that are vulnerable at the moment are of course Cyprus, Greece, Spain and of course Portugal and Italy as well. Italy is in a very deep recession but, of course alarmingly as well France is also beginning to suffer.
France cannot fit within the currency union, the eurozone - the euro single currency - with Germany, it’s just not working.
The harm is spreading throughout the European Union; it’s a contagion, which is entering many other countries.
Germany has done quite well out of the euro, as other countries such as the Netherlands and Finland. That of course eventually with the amount of harm that the euro is causing; those countries such as Germany which rely on their exports to the other states in the eurozone, will of course lose their exports markets because nobody will be able to purchase the German goods which they’re exporting to the other countries in Southern Europe at the moment.
So really eventually we will beggar every single state within the EU, within the eurozone, but of course at the moment Germany has been doing quite well, but I think that that will come to an end in the not too distant future.