One of the factors that have kept Greece in the Eurozone is the fear among the currency union’s other members that Greece would just be the first domino to fall.
This (from Open Europe) is one of many possible reminders why:
According to a high-ranking official at the Portuguese Finance Ministry quoted by Jornal de Negócios, Portugal (the ‘forgotten man’ of the euro crisis) will not be able to meet the EU-mandated deficit target of 4.5% of GDP for this year unless new austerity measures are adopted. The main reason seems to be the sharp fall in tax revenue: -3.6% during the first seven months of the year, as opposed to the 2.6% increase the Portuguese government was betting on for 2012. The alternative, the Portuguese press suggests, would be asking the EU-IMF-ECB Troika to relax the target. Boa sorte with that one, especially since in September we will hit the point where Portugal is within one year of being expected to return to the markets. Remember how the IMF’s requirement for a country to be funded for twelve months played out in Greece…