Another domino in the European debt crisis?
Portuguese Prime Minister Jose Socrates speaks during a press conference.
JEREMY HOBSON: The Portuguese prime minister has resigned because his government didn't like his plans to cut the budget and reduce the country's debt. European leaders are digesting that news today in Brussels at a meeting about the debt crisis.
Marketplace's Europe Correspondent Stephen Beard joins us live with more. Hi, Stephen.
STEPHEN BEARD: Hello Jeremy.
HOBSON: So here we go again with this European debt crisis. What does the resignation of the prime minister in Portugal mean for the country and its debt?
BEARD: Well, it means that the country doesn't have a new deficit reduction plan. And it now has a political uncertainty too. This is going to make it harder for the Portuguese to borrow and it makes it much more likely that Portugal's going to have to be bailed out like Greece and like Ireland. And this is the problem for the Euro. This would be the first Euro country to be bailed out. The third domino.
Here's Steve Barrow of Standard Bank.
STEVE BARROW: As these dominoes fall, the market really just sort of sniffs blood. And feels that literally any country could be vulnerable.
Spain is another possible domino, which would pose huge problems for the euro zone, because it's three or four times the size of Greece, Ireland and Portugal put together.
HOBSON: Now Stephen I mentioned this European summit today in Brussels. Are leaders there going to be able to provide any answers to the latest flare-ups?
BEARD: Well they hope that this summit is going to stop the rot among other things it sets up a beefed up bailout fund. But the Portuguese fiasco is an undoubted blow and embarrassment. And it does suggest this debt crisis is bigger than EU leaders realize.
HOBSON: Marketplace's Stephen Beard joining us live from London, thanks Stephen.
BEARD: OK Jeremy.