British government to compensate its account holders in Cyprus

LONDON (AFP) - Britain will compensate any British government and military personnel whose bank accounts in Cyprus are subject to a European Union bailout levy, Finance Minister George Osborne said on Sunday.

"For people serving in our military, for people serving our government out in Cyprus - because we have military bases there - we are going to compensate anyone who is affected by this bank tax," Mr Osborne told BBC television.

The announcement comes after reports in the British media on Saturday that around 3,500 British military and civilian personnel would be affected by an unprecedented tax on savings that is being levied as part of Cyprus' EU bailout. This is the first time private savers have been asked to help foot the bill for a euro zone bailout, with depositors facing a one-off tax of up to 9.9 per cent of their savings.

Around 3,000 British troops are based at two military bases in Cyprus, which are used by Britain as a strategic foothold in the Mediterranean.