Europe’s plan to halt debt crisis
EUROPE set out its arsenal to prevent a repeat of a year-long debt rollercoaster, amid rising expectations that Portugal needs a $ 104.31 billion bailout after hefty credit rating downgrades.
A two-day European Union summit called to seal the bloc’s ‘‘ comprehensive’’ response to a debt crisis crossed a major hurdle on Thursday when partners conceded to a last-minute German demand.
Berlin successfully argued that the timeframe for contributions to a future rescue fund should be renegotiated.
But after last
massive bailouts to Greece and then Ireland, Portugal edged a little closer to the brink on Thursday.
New York-based Standard and Poor’s lowered its rating for Portugal’s long-term public debt by two notches to BBB, hours after London’s Fitch Ratings took it down by two notches, from A+ to A-.
Those decisions came after Portugal’s parliament rejected the government’s latest austerity package, prompting prime minister Jose Socrates to resign late on Wednesday.
But Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of eurozone finance ministers, said on Thursday: ‘‘ Portugal won’t be left exposed by its European partners.’’
Should Lisbon require assistance, Juncker suggested 75 billion euros would be ‘‘ appropriate’’, but only ‘‘ under strict conditions’’.
T o p E U f i g u r e s w a r n e d Portugal there could be no escape f r om f i erce budget s avings. European Central Bank chief Jean-Claude Trichet said it was ‘‘ capital that Portugal would confirm plans that had been designed and approved by’’ EU institutions.