Why portugal needs bailout

Many market watchers expect some sort of debt restructuring over the next few years. Spain is the economy everyone is worried about. However, there have been positive signs in recent weeks that the country has managed to distance itself from the bloc's troubled peripherals. European leaders have also established a permanent stability fund that will replace the current bailout fund when it expires in Spain has long been seen as the economy that is too big to fail, given its huge size relative to those which have been bailed out.

Other countries have exposure to its debt, and any admission it could not meet its obligations would be a huge shock. In good news, it is collecting supporters. Francesco Garzarelli, co-head of macro markets research at Goldman Sachs in London, says Spain will not need a bail out. A European Commission spokesman Thursday said Spain "is well on track.

The eurozone appears deeply fractured, despite the best efforts of its leaders to settle the crisis. The end game of this great experiment -- having a common currency across such different economies is not yet clear.

Share this on:. Most Popular. Fine art from an iPhone? Join thought-provoking conversations, follow other Independent readers and see their replies. Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today. Already subscribed? Log in. Forgotten your password? Want an ad-free experience? In return for the loan, which includes 12 billion euros of support for the country's banks, Portugal has had to agree to a number of measures to increase tax revenue and reduce spending.

Mr Socrates resigned as prime minister after failing to get austerity measures through parliament. There will be a general election on 5 June. The deadline for the bail-out money to be in place is 15 June, when Portugal has to repay nearly 5bn euros of debt.

Portugal was the third eurozone country to have to ask for a bail-out, after Greece and the Irish Republic. Its economy is expected to contract this year as a result of the latest set of austerity measures. Portugal raised 1. But it had to pay an interest rate of 4. BBC business editor Robert Peston says there are fears that Greece's rescue is unravelling and that the Portuguese bail-out will not be the eurozone's last.