European leaders have given their reaction to the rejection of the tax on credit bank accounts by the Cyprus parliament. There was a unity of feeling that politicians on the Mediterranean island have to come up with another solution as resonated clearly in Austria.
“In fact Cyprus needs help from the European Union. I mean it’s the Cypriot politicians right that their parliament rejected the proposed law but they also have to suggest alternative solutions,” said Michael Spindelegger, Austrian Vice Chancellor and foreign minister.
The Spanish Prime Minister Mariano Rajoy stressed his disagreement with the proposed levy on bank deposits.
“Cyprus’ financial system is in very bad shape and needs to capitalise. Of course I am not in favour of people losing their deposits because they are not responsible for this situation,” he told reporters.
Germany backed the planned tax on savings and is now waiting to hear what other proposal Cyprus has to tackle the island’s debt and Berlin wants a quick answer.
“I regret, but respect, the decision by Cyprus lawmakers. Now we have to wait and see what alternative proposal Cyprus offers to the Troika,” said German Chancellor Angela Merkel.
Analysts say Cyprus differs from previous eurozone bailouts in that there is little sympathy among German politicians for the plight of the island’s banks.