Saturday, November 27, 2010


Here's to a happy and austere New Year

Another miserable week of tedious but crucial European economic manoeuvrings ended yesterday with Portugal's parliament approving its austerity budget for next year.

The budget contains a raft of tough measures aimed at sorting out the country's high debt and low growth problems. The hope is that they will restore market confidence and avoid the indignity of a bailout similar to those thrust upon Greece and Ireland.

It remains to be seen if the austerity measures quell alarm among investors and dampen speculation that Portugal is next in line to fall to 'contagion', the much-hyped European economic domino scenario.

The austerity measures officially approved yesterday are going to be felt by all in this country. Prime Minister José Sócrates admitted after yesterday's parliamentary vote that Portugal had "no alternative at all" but to accept them.

FT Deutschland said a majority of euro-zone states and the European Central Bank were leaning on Portugal to follow the example of Ireland and Greece in seeking a rescue plan from the European Union and International Monetary Fund.

Reuters yesterday reported a Portuguese government spokesman as saying: "This news article is completely false".

José Manuel Barroso, European Commission president and former Portuguese prime minister, was adamant that an aid plan for Portugal had neither been requested nor suggested.

"I can tell you that it's absolutely false, completely false," he told reporters in Paris.

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