Portugal’s caretaker government under José Sócrates last night requested an EU bailout, making Portugal the third EU member, after Ireland and Greece, to seek financial assistance.
 
The move comes after the country’s long term government bond rating was downgraded by Moody’s on Tuesday by a notch from A3 to BAA1 and the credit agency said Portugal would have to look for external help to resolve its debt crisis.
 
The decision to seek a bailout will end several months of continual pressure to resolve its increasingly weak public finances.
 
Commenting on the bailout, Sócrates addressed the nation late on Wednesday, saying: “We must all assume our responsibility. The Portuguese people know how to work in the national interest when it’s needed and this is why, in the national interest,  I tell the Portuguese people that it’s time to take that step, so that we can have the best resources for the Portuguese people and for Portugal.”

Investors are now watching to see if Spain could be next on the list but Spain’s economy minister Elena Salgado ruled out contagion.