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Tuesday, January 11, 2011

D-day for Portugal?


Tomorrow is set to be a big day for Portugal, as it hopes to find buyers for between €750m to €1.25bn of bonds - not a small feat. As the markets turn up the heat, investors think it's increasingly unlikely that Portugal will make the grade.

Ahead of the auction, writing an editorial in the Portuguese daily Jornal de Negócios, columnist and economist Helena Garrido laments the future of her country and the strategy taken by eurozone leaders.

She argues,

“External financial aid is not the solution for Portugal, or for the euro. The Greek and Irish experiences showed that [EU] interventions create new and more serious, problems threatening the very life of the Single Currency"

"The interventions, first in Greece and after in Ireland, have shown that the model taken in the face of the debt crisis has actually fed a domino effect with the final spectre of the collapse of the eurozone”

But things are certainly not looking rosy in Lisbon, and the possibility of a bail-out looks ever closer. This afternoon the central bank released figures predicting that Portugal's economy will contract in 2011, fuelling demands from other EU economies that Portugal make further austerity cuts.

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