SPAIN’S next door neighbour Portugal has welcomed its 78 billion euro EU bailout alongside a raft of new austerity measures.
As part of the cutbacks, airports and high-speed rail lines have been sacrificed with the building of an AVE link between Lisbon and Oporto put back until after 2013.
In addition health and education spending is set to be cut by 745m euros, civil service pay and pensions will be frozen, and people on state pensions above 1,500 euros a month will see them reduced.
In total, Portugal is expected to cut public spending by 3.4 per cent of its GDP this year and raise an extra 1.7 per cent by increasing taxes on cars, tobacco and electricity.
It will also get rid of income and corporation tax loopholes.
Fortunately for Spain – despite being the last of the ‘PIGS’ to resist a bailout – the country widely seen as the next domino to fall for the moment seems to be safe from contagion.