Cypriots will now face a painful recovery

As a Cypriot bailout deal has been agreed, a package of bank restructuring and deposit levies, things are not looking good for the islanders. The BBC's Robert Peston summarises two huge threats to the small economy:

  • An economy that will be starved of credit, and will therefore shrink rapidly and very painfully for citizens.
  • An economy whose main industry, offshore banking, is being shut.

(Full article)

Whatever recovery can follow will be painful and could be compounded further by the addition of capital controls.