Portugal pressured to take EU bail-out after new data

Portugal came under ever more pressure to take a bail-out as it revealed that the hole in its finances is bigger than expected.

New figures showed the country's budget deficit stood at the equivalent of 8.6pc of its gross domestic product (GDP) for 2010, missing the government's 7.3pc target by more than a percentage point.

Lisbon blamed the size of the deficit on a change in the calculation methods at Eurostat, the European statistical agency, which meant the figure had to reflect nationalised bank losses and the state of public transport companies.

Politicians have complained the alterations were "like changing the score after the match is over" and said on Thursday the deficit would otherwise have been 6.8pc.

However, the revelation carried unpleasant echoes of the admission from Greece at the end of 2009 that its finances were in a worse state than at first believed. That shock ignited the eurozone's debt crisis as investor fears over nations' borrowing escalated, while Greece eventually received a €110bn (£97bn) rescue.

Portugal's 10-year bonds were trading with yields above 8.6pc, as investors demanded sky-high returns to take on the debt. (read more)