The European nations are now urging Portugal to accept a bailout package in order to save Spain. Actually, Portugal is highly exposed to Spain and if one becomes insolvent, the effect will come on the other.
If Portugal does not accept the bailout package, then both Spain and Portugal will need the bailout and that will make the count to nations accepting bailout in Europe to four, the other two being Greece and Ireland. If Spain collapses, it will come as a big blow to the Euro, as Spain is the fifth largest economy in Europe.
Analysts are of the view that after Ireland, Portugal is the nation that will look out for a bail out and Spain will follow soon. The speculations have been reached from the news that the creditors have increased the borrowing cost to both these nations.
EU officials are continuously giving assurances that there are no threats of the Euro zone breaking down in spite of their nations collapsing financially. German chancellor Angel said that “Euro” is in an exceptional crisis situation and it can come out quite well from it.
Some economists are of the view that the European bloc may break because the weaker nations are unable to compete with Germany and the latter has to bear all the debt burden of the weaker nations. Meanwhile, European Commercial Bank has stated that their effort to save the failing banks of Europe will continue in the coming months as that is very much necessary to stop the panic and bring out the Euro from the crisis.