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Portugal: A third bailout for the European Union

Irish Finance minister Michael Noonan (L) chats with his Spanish counterpart Elena Salgado during the traditional family picture in the baroque theatre of the royal palace of Godollo during an Economic and Financial Affairs Council (ECOFIN) meeting, on April 8, 2011 in Budapest.

Bob Moon: It had all the makings of a very gloomy gathering: European finance ministers met in Hungary today, to talk about the third bailout in a row for a heavily-in-debt Eurozone country. After Greece, and then Ireland, it was Portugal's turn this week to beg for financial help.

But today's meeting was upbeat. Many of those EU ministers insist Europe's debt crisis is now under control. As Stephen Beard reports from London, not everyone shares that optimism.


Stephen Beard: The Spanish finance minister was adamant. At today's meeting, she declared: the crisis is over; the contagion's been stopped in its tracks. She said it is "out of the question" that Spain would need bailing out next.

Ward McCarthy of Jefferies Investment Bank:

Ward McCarthy: We would love to think that the debt crisis ends with Portugal. But again, the market's not going to believe that it's ended until they actually see some hard numbers to support that contention.

EU ministers point to yesterday's Spanish government bond sales. They went very well. But economist Andrew Hilton says that to really get itself out of trouble, Spain needs growth -- and that remains elusive.

Andrew Hilton: The government has just cut its economic growth forecast for this year and next. And unemployment itself is continuing to rise. And I don't think the Spanish are out of the woods yet.

And Simon Tilford of the Centre for European Reform says Spain and other heavily indebted countries on the periphery of Europe have just been dealt another blow: This week's hike in interest rates by the European Central Bank.

Simon Tilford: There's no doubt it's going to have a negative impact. I mean the last thing the peripheral states need at the moment is a tightening of monetary policy. That will push up further the cost of borrowing for governments, push up the costs of household's mortgages. It's the last thing they need.

Few analysts predict that Spain will be the next domino to fall. But very few share the ministers' confidence that Europe's debt crisis is over. Many believe the problem may linger well into this year.

In London, I'm Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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