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Portuguese crisis deepens

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Portuguese crisis deepens

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Portugal’s President says the country’s next government faces an unprecedented challenge.

The warning comes as economic pressure increases to follow Greece and Ireland in asking for an EU and IMF bail-out to rescue the country.

There will be a general election on June 5.

President Anibal Cavaco Silva said: “The next government will face an unprecedented economic and financial crisis. The country’s difficulties are so deep that nobody can have any illusion that they will disappear from one day to the next.”

Portugal’s budget deficit has reached 8.6 per cent of Gross Domestic Product, that is above the 7.3 per cent agreed with Brussels.

Credit agencies downgraded Portugal’s rating last week after austerity measures proposed by Prime Minister Jose Socrates were rejected, prompting him to resign. Socrates has insisted his country can do without a financial bailout. He remains the head of a caretaker government.

The President says the country has to ensure the financing necessary for the economy to function.