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| Version 4 | Version 5 |
|---|---|
| EU denies Portugal in line for aid package | EU denies Portugal in line for aid package |
| (about 3 hours later) | |
| European Commission President Jose Manuel Barroso has dismissed reports that Portugal is next in line for a financial rescue package. | European Commission President Jose Manuel Barroso has dismissed reports that Portugal is next in line for a financial rescue package. |
| Mr Barroso said the reports were "absolutely false, completely false". The Portuguese government has made similar denials. | Mr Barroso said the reports were "absolutely false, completely false". The Portuguese government has made similar denials. |
| Speculation that Portugal would follow the Irish Republic in asking for help has been rising this week. | Speculation that Portugal would follow the Irish Republic in asking for help has been rising this week. |
| Portugal approved its 2011 budget on Friday, which aims to cut its debts. | Portugal approved its 2011 budget on Friday, which aims to cut its debts. |
| The budget seeks to cut the country's deficit from 7.3% of economic output this year to 4.6% in 2011. | The budget seeks to cut the country's deficit from 7.3% of economic output this year to 4.6% in 2011. |
| Under the measures in the budget, public spending will be cut and VAT increased to a maximum rate of 23%. | Under the measures in the budget, public spending will be cut and VAT increased to a maximum rate of 23%. |
| Prime Minister Jose Socrates said the country had "no alternative at all" to cutting its budget. "We must make this effort," he said. | |
| His Spanish counterpart Jose Luis Rodriguez Zapatero has also moved to dismiss speculation that his country may be forced to seek EU aid. | |
| He said he ruled out "absolutely" any bail-out of Spain. | |
| "I am not delivering a message of confidence just because I want to, but because of concrete facts," he said. | |
| Under pressure | Under pressure |
| The euro has fallen sharply on fears that the problems experienced by the Irish Republic could spread to other countries in the eurozone. | The euro has fallen sharply on fears that the problems experienced by the Irish Republic could spread to other countries in the eurozone. |
| The euro fell one cent against the dollar to $1.3265 on Friday. It has now fallen by almost four cents, or 3%, this week. | The euro fell one cent against the dollar to $1.3265 on Friday. It has now fallen by almost four cents, or 3%, this week. |
| A report in the Financial Times Deutschland suggested that some eurozone countries and the European Central Bank were putting pressure on Portugal to ask for financial assistance. | A report in the Financial Times Deutschland suggested that some eurozone countries and the European Central Bank were putting pressure on Portugal to ask for financial assistance. |
| However, the Portuguese government said the reports were "completely false". | However, the Portuguese government said the reports were "completely false". |
| 'Obscure comments' | 'Obscure comments' |
| Germany's Finance Minister Wolfgang Schaeuble has also dismissed reports, and comments from the country's own central bank head, that the European Union's bail-out fund could be increased. | |
| He called such reports "completely over the top" and said there were no plans to commit more money to the fund. | |
| "At the moment we have a rather nervous situation because there is an incredible amount of speculation, with completely obscure comments suddenly taking on meaning and unsettling markets," he said. | "At the moment we have a rather nervous situation because there is an incredible amount of speculation, with completely obscure comments suddenly taking on meaning and unsettling markets," he said. |
| On Thursday, German central bank boss Axel Weber said the bail-out fund could be increased in size by a further 100bn euros ($134bn, £85bn) if needed. It currently stands at 440bn euros. | On Thursday, German central bank boss Axel Weber said the bail-out fund could be increased in size by a further 100bn euros ($134bn, £85bn) if needed. It currently stands at 440bn euros. |
| Budget cuts | Budget cuts |
| This week's fall in the euro was triggered by the Irish Republic's request for financial assistance last weekend. | This week's fall in the euro was triggered by the Irish Republic's request for financial assistance last weekend. |
| It is currently negotiating with the European Union (EU) and the International Monetary Fund (IMF) over a rescue package expected to amount to 85bn euros. | It is currently negotiating with the European Union (EU) and the International Monetary Fund (IMF) over a rescue package expected to amount to 85bn euros. |
| The Republic will be the second eurozone economy to be rescued, after Greece was granted a 110bn-euro bail-out over the summer. | The Republic will be the second eurozone economy to be rescued, after Greece was granted a 110bn-euro bail-out over the summer. |
| In order to tackle its high budget deficit, and meet conditions of any loan package, the Irish government unveiled a tough recovery plan on Wednesday, designed to save 15bn euros over the next four years. | In order to tackle its high budget deficit, and meet conditions of any loan package, the Irish government unveiled a tough recovery plan on Wednesday, designed to save 15bn euros over the next four years. |
| Investor confidence | Investor confidence |
| However, there are doubts about whether the measures will be passed when parliament votes on the budget next month. | However, there are doubts about whether the measures will be passed when parliament votes on the budget next month. |
| The result of the Donegal by-election is due later, and early indications are that the outcome will cut the Irish coalition government's parliamentary majority. | The result of the Donegal by-election is due later, and early indications are that the outcome will cut the Irish coalition government's parliamentary majority. |
| On Friday, ratings agency Standard & Poor's downgraded some of the Republic's top banks. | |
| It downgraded Anglo Irish Bank by six notches, and Bank of Ireland and Allied Irish Banks by one notch. | |
| The proposed cuts and the impending EU/IMF bail-out have failed to calm investors' fears that the Irish debt crisis could spread to other countries with high budget deficits, particularly Portugal and Spain. | The proposed cuts and the impending EU/IMF bail-out have failed to calm investors' fears that the Irish debt crisis could spread to other countries with high budget deficits, particularly Portugal and Spain. |
| As well as a weakening euro, government bond yields in the Republic, Portugal and Spain have risen this week, and edged higher again on Friday. | As well as a weakening euro, government bond yields in the Republic, Portugal and Spain have risen this week, and edged higher again on Friday. |
| Increasing bond yields reflect waning confidence in a government's ability to repay its debts. | Increasing bond yields reflect waning confidence in a government's ability to repay its debts. |