John Redwood and Douglas Carswell worry about banking panic after confiscation of Cyprus deposits

By Tim Montgomerie
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Tory MPs have reacted with concern to the terms of a bailout of Cyprus' banks which will see up to 9.9% of depositors' money confiscated as part-payment for the rescue.

John Redwood has blogged that savers have been "mugged". The unexpected raid on depositors was, he continued, "a great way to encourage the mass migration of savings from weak banks in the Euro area to stronger banks somewhere else." Douglas Carswell agrees. The Clacton MP told the Mail on Sunday that "ordinary Europeans are being fleeced by the Continent’s elite in order to rescue foolish banks." "Why," he asked, "would you risk putting your money in Greek, Spanish or Portuguese banks after this?" ATMs of Cypriot banks have been emptied this weekend by anxious savers. UKIP's Nigel Farage called the bank levy "theft, pure and simple". Eurozone leaders have done little to reassure investors in other troubled parts of the single currency. The Times' Sam Coates Tweeted that Jeroen Dijsselbloem, the president of group of EZ ministers, "declined to rule out taxes on depositors in countries beyond Cyprus".

George Osborne, meanwhile, has said that British troops and other government workers serving in Cyprus will be compensated for the EU's extraordinary levy. He told BBC1 that for "people serving in our military and serving our government we are going to compensate anyone affected by this bank tax." The Chancellor also used the news to reinforce his argument that deficit reduction must continue. Cyprus was, he said, "an example of what happens if you don't show the world that you can pay your way".

> Our ToryDiary report of George Osborne's BBC1 interview.