How much damage will Greece’s, and now Spain’s, downgraded credit rating status cause to other countries?
That is the question being asked in several European capitals as fear spreads over market nervousness.
The Greek dilemma has raised fresh concerns over debt laded Portugal which is now in the same position as Athens was when it first asked for help.
Standard and Poor’s ratings reduction has triggered alarm that Lisbon may soon share the same fate.
With its record level of unemployment showing no sign of sliding Spain too now is also considered a renewed risk.
But there is no reason to panic according to Portugal’s prime minister who says his country is not Europe’s next weakest link.
“The government and opposition have agreed to work together in the fight against speculation and to find the best way to tackle the current situation,” said Jose Socrates.
Some experts, however, say there is no smoke without fire and speculators should not be made to take all the blame.
Financial analyst David Schnautz believes confidence building measures are urgently needed:
“From the point of view of the markets in this moment there is clearly the fear that it will not only be Greece but that it’s Portugal, the second weakest link of the chain, that’s in the firing line.”
Greece, meanwhile, is preparing itself for more civil unrest with trade unions planning massive May Day protests against government austerity measures.