Portugal Asks for Bail-out Which Could Cost Britain £4.4 Billion
THE DAILY TELEGRAPH: Portugal last night became the third European Union country after Greece and Ireland to formally request an emergency bail–out which could cost Britain £4.4 billion.


The country's caretaker prime minister José Sócrates said the measure had been taken after the stricken nation had run out of options.
Economists last night put the UK's involvement in a Portuguese bail–out at up to a potential £4.4billion.

After months of resisting having to apply for a bail–out from the EU and the International Monetary Fund, Portugal's cost of borrowing has reached unsustainable levels.

Addressing the nation last night Mr Sócrates, said: "I have always said that asking for aid would be the final way to go, but we have reached the moment."

It is understood that the rescue fund could be as high as £70 billion, or €80 billion.

Sources close to the Treasury said last night that Britain would take part in any Portugal–related discussions involving the EU's 27 member states. However, the type of bail–out is yet to be discussed and therefore the extent of the UK's exposure was impossible to gauge, the sources said. » | James Hall | Thursday, April 07, 2011

THE DAILY TELEGRAPH: Spain 'won't follow Portugal' with bail-out: Spain said it will not follow ailing neighbour Portugal in seeking a European bail-out. » | James Hall | Thursday, April 07, 2011

Portugal in Turmoil
MAR 23 - Portugal's Prime Minister steps down after austerity vote fails. Conway Gittens reports

Portugal in Crisis after Prime Minister Resigns over Austerity Measures
THE GUARDIAN: • EU bailout closer after José Sócrates loses crucial vote • Political limbo will put pressure on Portuguese bonds

Portuguese prime minister José Sócrates has said he has submitted his resignation to the president after parliament rejected his minority Socialist government's latest austerity measures.

The loss of the vote "has taken away from the government all conditions to govern," Sócrates said. It brings the country closer to needing a bailout.

Sócrates is said he tendered his resignation to President Aníbal Cavaco Silva tonight, leaving the country in a political limbo that would place further pressure on Portugal's record-level bond yields.

Sócrates had said before the vote that he would resign if the measures to cut spending and increase taxes – designed to see off a bailout similar to those taken by Greece and Ireland – were rejected.

The measures had aroused the fury of trade unions, and railway engineers walked off the job in the morning, causing widespread travel disruption. » | Giles Tremlett in Madrid | Wednesday, March 23, 2011

THE GUARDIAN: Portugal bailout 'could cost UK £3bn': Bailout request seen as 'inevitable' following prime minister's resignation in wake of failure to push through austerity measures » | Graeme Wearden | Thursday, March 24, 2011

Portugal Braces for Government Collapse
THE WALL STREET JOURNAL: LISBON, Portugal—Portugal's government could collapse Wednesday after opposition parties withdrew their support for another round of austerity policies aimed at averting a financial bailout.

The expected defeat of the minority government's latest spending plans in a parliamentary vote will likely force its resignation and could stall national and European efforts to deal with the continent's protracted debt crisis.

The vote comes on the eve of a two-day European Union summit where policy makers are hoping to take new steps to restore investor faith in the fiscal soundness of the 17-nation euro zone, including Portugal.

Last year, both Greece and Ireland had to accept massive rescue packages after markets lost faith in their governments' efforts to deal with their debt burdens.

The political tension fueled a rise in Portugal's borrowing rates, just as it is trying to cut spending. The yield on the country's 10-year bond, for example, was up to 7.57%Tuesday—just shy of its euro-era record level. The interest rate has been above 7% for several weeks despite the government's earlier austerity measures that, its political rivals say, failed to quell investor fears.

As in Greece, the austerity policies—including tax hikes and pay cuts—have prompted an outcry from trade unions and numerous demonstrations and strikes. Train engineers walked off the job during the morning commute Wednesday, causing widespread travel disruption.

By most measures, Portugal is one of the euro zone's smallest and feeblest economies but its financial collapse would likely trigger a fresh bout of nerves over other debt-heavy—and bigger—euro countries such as Spain, Belgium and Italy.

"Portugal seems very likely to become the third … eurozone country to need a bailout," Emilie Gay, European economist at Capital Economics, said. » | Associated Press | Wednesday, March 23, 2011