Cypriot's use their get out of jail free card
Cyprus has been the main focus of attention within the currency markets over the last few weeks. A bailout from the European Union (EU) and the International Monetary Fund (IMF) was desperately needed in order to prevent the banking system collapsing. A deal was finally reached on 25th March to ensure that Cyprus was 'still open for business' and that the integrity of the Eurozone was still in tact.
The deal means that Cyprus will be awarded around $13 billion in emergency loans, however its second largest bank - Laiki Bank - will be closed down and despoits in to other banks, including the countries largest bank - Bank of Cyprus. Although the storm appears to have been weathered, the outlook for the country remains uncertain. Whilst the bailout will mean the government can pay off its own debts and restructure the banks without facing exiting the Euro, Cyprus must enforce tough austerity measures to rebuild the country and try regain trust from foreign investors.
Recent US data has pointed to continued economic recovery and to an outperformance of other major economies. Markets will be looking to this months data numbers for further evidence of these trends. Having said that Ben Bernanke, the Federal Reserve Chairman claims that the US is still in need of further incentives to bolster the economy.
The UK released it's annual budget on March 20th - outlining the country's revenues and expenditure for the year ahead. The key points delivered by Chancellor George Osborne were:
- Growth for 2013 expected to be 0.6%, down from the 1.2% original forecast.
- The country's deficit was falling.
- Public Sector debt was on the rise.
Osborne's flagship budget plan was to help people buy their own homes - 'The Help to Buy' scheme - aimed at first time buyers.
It enables all purchasers to put down a 5% deposit on a newly built home.
Up to 20% of the cost of the home will be funded by a shared equity loan, which will be interest-free for the first five years. This will in effect see the government taking a stake in the value of borrowers' homes. It plans to invest £3.5bn in these loans.
The remaining value of the property will be funded by a standard mortgage to cover the remaining 75%.
The aim to help stoke the UK's flagging housing market. In the last housing boom more than four million mortgages were taken out every year — but this slumped to little over a million last year.