Portugal has become the third Euro-zone country after Greece and Ireland to ask for a bail out from the EU.
The country’s caretaker prime minister Jose Socrates went on television last night to say that the request for aid had become “inevitable” saying the cash-strapped nation had run out of options.
“I have always said that asking for aid would be the final way to go, but we have reached the moment.”
“I tried everything, but in conscience we have reached a moment when not taking this decision would imply risks that the country should not take.”
The bail-out could cost the EU as much as high as £70 billion with economic analysts predicting Britain may have to stump up a sum anywhere between £4 billion and £6 billion.
British taxpayers have already given Ireland economic assistance to the tune of £7billion.
José Manuel Barroso, the European Commission president, said that Portugal’s request for help would be “processed in the swiftest possible manner, according to the rules applicable” and said he had “confidence in Portugal’s capacity to overcome the present difficulties”.
Socrates resigned as Prime Minister last month after opposition parties rejected his austerity budget to tackle the country’s economic troubles. His now heads up an interim government.
Analysts warned meanwhile that Portugal’s econonmic woes could spread to other eurozone countries, chiefly Spain.