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Crisis talks as Portugal teeters

Wednesday, July 03, 2013 - 02:09

July 3 - There's political turmoil in Portugal after the resignation of two key ministers and reports that others may be about to follow them. Ivor Bennett lools at what implications the crisis has for the euro zone.

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Revolving door politics Portuguese-style - as soon as one replacement minister was found, another was trying to leave. Maria Luis Albuquerque has been named the new Finance Minister replacing Vitor Gaspar. He'd buckled under pressure from public anger over austerity measures, which were largely implemented by him. The Foreign Minister submitted his resignation next. It's not been accepted yet - but there are now rumours two more ministersministers also want to quit. The Prime Minister, though, says he's staying put. (SOUNDBITE) (Portuguese) PORTUGAL PRIME MINISTER, PEDRO PASSOS COELHO, SAYING: "With me the country will not opt for a political, economic and social collapse. There is a lot of work to do, and we must reap the fruits that we have sowed with so much effort." But the markets didn't like it. Portuguese bond yields slumped - the return on 10-year ones now hitting 8% - the highest for 8 months. Joao Queiroz is Head of Trading at Gobulling. (SOUNDBITE) (Portuguese) GOBULLING HEAD OF TRADING, JOAO QUEIROZ, SAYING: "The Portuguese PSI20 index was the worst performing in Europe yesterday and today started with a further 5 percent drop. There's a lot of pressure on the banking sector, with falls of around 10 percent." The Prime Minister has fought hard to keep Portugal on course to exit its 78 billion euro bailout next year. He's done so quietly while attention was focussed on the likes of Greece, Spain and Italy. That - says Nick Beecroft from Saxo Bank - will be rewarded. SOUNDBITE (English) NICK BEECROFT, CHAIRMAN AND SENIOR MARKET ANALYST, SAXO BANK, SAYING: "I slightly have my fingers crossed, but I think it's a hiccup. Given the progress they've made, I think there'll be a great deal of goodwill around them in the EU Commission, in the ECB, in Germany, in the IMF, there'll be some lessening of requirements if needed, a negotiation, a compromise." But many in Portugal have clearly had enough. As the country struggles with its worst economic crisis for 40 years many are questioning if it will all be worth it.

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Crisis talks as Portugal teeters

Wednesday, July 03, 2013 - 02:09