Portugal PM quits as House rejects new austerity plan

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FE Team | Published: March 25, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

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LISBON, Mar 24 (AFP): Portuguese Prime Minister Jose Socrates resigned on the eve of a key EU summit on the eurozone debt crisis after parliament rejected his new austerity plan, increasing Lisbon's chances of seeking a bailout. All five opposition parties voted Wednesday against his Socialist government's fourth cost-cutting plan in a year aimed at avoiding a multi- billion euro financial bailout like those given to Greece and Ireland. The political drama threatened to derail a two-day summit that gets under way in Brussels Thursday which expected to finalise the bloc's response to a year-long eurozone debt crisis. It also will increase borrowing costs for the Portuguese government as it faces bond replayments amounting to nine billion euro ($12.9 billion) falling due by June 15, boosting the probability that Lisbon will seek a bailout. "The opposition removed from the government the conditions to govern. As a result I have presented my resignation to the president," Socrates said after a 20-minute meeting with President Anibal Cavaco Silva. The euro fell sharply against the dollar on Wednesday due to market fears that events in Portugal would undercut the EU summit and stoke the year-long eurozone debt crisis. At around 9:00 p.m. (2100 GMT), shortly after Socrates' resignation announcement, the single currency traded at $1.4083, down from $1.4196 at the same time Tuesday.