Saturday 3 December 2016

Emmet Oliver: Brave Portugal bows to inevitable, but it could be good news for us

Emmet Oliver

Published 07/04/2011 | 05:00

Portuguese caretaker Prime Minister Jose Socrates making the statement yesterday
Portuguese caretaker Prime Minister Jose Socrates making the statement yesterday

Portugal bowed to the inevitable last night by admitting for the first time it needed a rescue package from the EU. Like Ireland in November, Portugal tried to convince the markets it could limp along on its own, but in recent days even its own banks were admitting publicly the game was up.

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The markets have lost faith in Portugal for a multitude of reasons. One is the country's debt levels, which will soon amount to 100pc of everything the country produces.

Another reason Portugal is viewed negatively by international lenders is the low growth prospects of the country. With exports mainly of food, textiles and wood, Portugal's economy is not regarded as sophisticated enough and when eastern European states entered the EU, Portugal's historical advantage in wage rates was also wiped out.

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