Economists now view portugal bailout as 'inevitable'

Portugal has been resisting asking for a rescue but economists and market experts believe its battle could be ending – even as the country raises taxes and embarks on the biggest spending cuts for three decades.

Emilie Gay, economist at Capital Economics, said: "With bond yields stubbornly high and heavy debt redemptions due over the next few months, it appears all but inevitable that Portugal will be forced to follow Greece and Ireland in accepting financial support from the EU and IMF."

She said it now seemed a "matter of when rather than if" Portugal would accept a bailout as the yields – interest rates – on 10-year bonds have hovered around 7% for more than a month; Greece and Ireland asked for help within four weeks of being pushed to such levels.

Portugal has just €4bn (£3.4bn) in cash reserves and €9bn of debt to mature in April and June, she said. Portugal's benchmark 10-year bond yield rose to 7.69% today – not quite the record levels of 7.81% – pushing the premium investors demand to hold Portuguese bonds over German bonds, regarded as the safest in the eurozone, to 4.43 percentage points. 

Source: The Guardian