The cost of borrowing in Portugal steeply escalated today as the political and economic turmoil engulfing the country deepened.
Ten-year government bond yields rose to 8.2 per cent, their highest since November last year while two-years increased to 5.47 per cent. In addition its stockmarket, the PSI 20 collapsed by almost 7 per cent as worried investors sold-off riskier assets on the back of concern over the dire state of the nation’s economy and debts.
For the past two years Portugal has endured a recessionary environment and there is little light at the end of the tunnel with its economy forecast to slide to 2.3 per cent in 2013.
It received a bailout topping 78bn euros (£6bn) in 2011, on the proviso that it brought in austerity measures, which have since spurred on mass protests in the country.
This week two of Portugal’s leading politicians including its Finance Minister Vitor Gaspar, the man behind implementing the austerity programme resigned adding, further tension to the country’s coalition government.
Elsewhere yields on Spanish and Italian bonds have also risen and Europe’s major stock markets are down with the FTSE 100 losing some 2 per cent in earlier trading.