Portugal Asks EU For Bailout

BBC News reports:

Portugal's bail-out request is expected to be discussed when EU finance ministers meet later in Budapest.

European Central Bank head Jean-Claude Trichet is also likely to mention Portugal at his news conference after the latest eurozone rate decision.

The ECB is expected to raise interest rates, which could create problems for debt-ridden countries.

Portugal's caretaker Prime Minister Jose Socrates said on Wednesday he had asked the EU for financial assistance.

Portugal follows Greece and the Irish Republic in seeking a bail-out.

'National interest'

However, Spain was quick to say it would not be following these countries in seeking assistance.

Spain's Economy Minister Elena Salgado said that financial markets were perfectly capable of distinguishing between the situations in Portugal and Spain.

In an interview on the national radio station SER, she said that the risk of contagion was "absolutely ruled out", and added it was clear that Spain's economy was much more competitive than Portugal's.

Spain has the EU's highest unemployment rate and is struggling to deal with a banking crisis and the collapse of its property boom.

In Portugal, Mr Socrates put off a bail-out request as long as he could, having stepped down as prime minister after failing to pass austerity measures.

"I always said asking for foreign aid would be the final way to go but we have reached the moment," he said.

"Above all, it's in the national interest."

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