MarketLine Blog

Current events bad for business

As the Cyprian government seizes private assets, and as freedom of speech in the press is about to be curtailed in the UK, a global downturn has proven to be sufficient for various entities to erode the very structures necessary for good business.

Above all, business values consistency. And although business has reacted in the UK, in general, quite well to the drop in corporation tax and other supply-side measures, business especially international business does not appreciate hasty reform especially in fundamental areas of the law, in this instance freedom of the press. And this is what many Conservatives acknowledge as they do battle in the legislature against the setup of an independent press regulator. Such a body, as proposed, would have widespread powers, as affected by Royal Charter, to curb the presence of highly inaccurate stories and allegations in popular publications which have accepted the Charter. Obviously this is all premised on the exact conclusion of inter-party talks, and the passing of the bill in the legislature, but the charter could potentially give an independent regulator the power, when open to a charitable interpretation in a courtroom, to limit any statement made in any signed-up popular publication which is even slightly inaccurate – something which quite obviously affects marketing functions in big business which often distribute their press releases to industry associations, including the press association. That these press releases, through the act of copywriting, often form a substantial part of the day job of a modern journalist, only makes this more important.

Cyprus is being tested as guinea pig by Brussels as the extreme seizure of private assets – up to 10% of savings over 100,000 euros and 6.75% under this sum – without any form of direct public consultation, or referendum, takes place. This is indeed an extreme example of government encroaching on previously entrenched freedoms. Until this point, Europe seemed, despite a struggling Eurozone and mass unemployment in debtor countries, to be upholding, admirably, most of the rules necessary to keep good business occurring, e.g. that bank accounts are safe from government raiding. Now, following the conditions of a much-needed bailout for the island state from Brussels, depositors face the prospect of what most would call literally the legalisation of theft. How can business be done in such conditions, or, more specifically, how can long-term investment in the country continue when bank accounts cease to be protected by law?


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