Spanish Business News

Portugal's acting prime minister has confirmed the country has called for a bailout from the European Union.

In a television statement, Jose Socrates said the administration had requested financial aid from the European Commission.

For months Portugal has resisted increasing pressure to apply for help from the European Union (EU) and the International Monetary Fund (IMF).

Until now Lisbon has said it could manage on its own, but its borrowing costs reached unsustainable levels after the collapse of the government in March.

The move makes Portugal the third country in the eurozone to seek help, following Greece and Ireland.

The European Commission's top economic official, Olli Rehn, welcomed the decision, saying it was in the interest of the 17-nation single currency zone.

Eurozone officials have said Lisbon is likely to need between €60bn (£52.6bn) and€80bn (£70.2bn) in EU and IMF loans over the next three years.

On Wednesday Portugal raised more than €1bn ($877m) on the bond markets, but had to pay an interest rate of 5.9% on its 12 month bonds, compared to 4.3% previously.

Speaking ahead of the announcement on Jeff Randall Live, Larry Kantor, global head of research at Barclays Capital also welcomed the developments. 

"The sooner they get the assistance and we establish this, the sooner we'll get more stable markets there," he said.

Source: Sky News