Lisbon's borrowing costs are approaching the point of no return as market confidence in the country's creditworthiness continues to sink. More significantly, the nation is heading toward a political crisis after the opposition declared it will no longer support the government's austerity measures. Earlier this week, Socialist Prime Minister Jose Socrates warned that his minority government could not continue if the Portuguese parliament does not approve the latest batch of austerity measures...
But the opposition, which had supported previous rounds of austerity measures, is refusing to play along... The opposition parties appear to be responding to the public mood in the country, which is turning against the belt-tightening. The government's efforts to sort out the country's finances with tax increases and cuts in welfare spending have led to a wave of strikes...
Both Finance Minister Santos and Prime Minister Socrates have warned that opposition resistance to the new austerity measures would leave Portugal with no choice but to ask for a bailout.
21 March 2011
Will Portugal's economy be the next crisis?
Der Spiegel online: