A political crisis in Portugal and ongoing funding concerns for the Spanish banking sector are perpetuating global concerns over the eurozone sovereign debt crisis as a bailout could be triggered in the coming weeks, according to Bloomberg. On Wednesday, the parliament of Portugal moved to vote on critical deficit-cutting plans for the minority government led by Prime Minister Jose Socrates. The “stability and growth” program of austerity measures were likely to be defeated by opposition parties, which would leave the country facing early elections and a looming European Union bailout.
Nicola Mai of JPMorgan & Chase said, “The likelihood that the Portuguese government will fall this week looks high,” and said a bailout looks that international aid is likely “in the near term.” Meanwhile, Jose Encinar of Idealista.com said that the shortfall facing the Spanish banking industry is “substantially higher” than the Bank of Spain’s official estimate due to real-estate losses. Encinar said that prices from the housing boom are still being used, with values having dropped 40% since their peak in 2007, and estimated that the €15.2 billion euro shortfall projected by the central bank could be short by as much as €85 billion.
Click here to read the story on the Portugal crisis from Bloomberg News.
Click here for coverage of Spain’s banking industry from Bloomberg News.