Portugal under pressure to seek bailout

| November 26, 2010 | 0 Comments
Portugal under pressure to seek bailout

A German newspaper has today reported that Portugal is under pressure to seek emergency aid from the EU rescue fund - something which the country strongly denies.

Today, the Financial Times Deutschland reported that a number of euro zone nations and the European Central Bank were urging Portugal to follow Ireland and Greece and seek financial help from the EU and the International Monetary Fund.

The report comes as the euro zone’s weaker economies - in particular Portugal and Spain - could be forced to seek a bailout as fears of contagion spread through the region.

Yields on 10-year bonds in both countries have been rising to dangerous levels – mimicking what happened in Greece and Ireland – just before they were forced to seek emergency aid.

However, both countries brushed the fears aside and Portuguese Prime Minister, Jose Socrates, said it “has no need for any aid” and insisted that its difficulties are different to those in Ireland, while Spanish Foreign minister, Trinidad Jimenez, insisted the Irish deal will “stabilise” the euro zone.

On Monday, Jean-Claude Juncker, Luxembourg Prime Minister and Eurogroup Chairman, warned that Ireland’s debt crisis could spread to Portugal and Spain.

Many economists have suggested that Portugal’s spiralling deficit has been making markets nervous and failure to hit Government targets for bringing down the deficit could cause a market panic over the country early next year.

Tags: 10-year bonds, , EU rescue fund., , , , ,

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