Portugal's PM quits amid debt crisis

2011-03-24 08:05

Lisbon - Portugal's prime minister has quit after opposition parties overwhelmingly rejected his last-ditch round of austerity measures aimed at preventing the eurozone's weakest economy from plunging into chaos. The move turned the debt-plagued nation into the prime candidate for the continent's next bailout package.

All opposition parties united to defeat Prime Minister Jose Socrates' proposals in a parliamentary vote, saying the belt-tightening went too far on the eve of a summit of European leaders.

But their decision means that Portugal is much more likely to be forced to seek a bailout like those accepted by Greece and Ireland last year, and puts Spain squarely into the crosshairs of nervous investors concerned about which European nation might be next.

Socrates followed through on Wednesday on a pledge that he would resign if the measures were not approved, saying the opposition parties "took away the government's ability to continue running the country".

"As a consequence, I have tendered my resignation," Socrates said in an announcement carried live on television.

In keeping with Portugal's constitution, Socrates formally submitted his resignation to Portugal's president, a ceremonial figurehead who has no executive powers. The prime minister's resignation ended the centre-left Socialist government's six-year period in power.

Socrates' latest austerity package was its fourth set of measures introduced over 11 months as Portugal scrambled to avoid the embarrassment and financial consequences of asking for outside help to prop up its shaky economy. The nation has already introduced tax hikes and pay cuts that have angered trade unions and prompted a wave of successive street demonstrations and strikes.

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