Portugal bail-out

Portugal has requested emergency financial aid from the European Union and the International Monetary Fund.

After resisting for months, borrowing became unsustainable for the Mediterranean nation as interest rates on the international bond markets spiked to 5.9%.

The caretaker Portuguese prime minister, José Sócrates - who stepped down from his position after failing to pass austerity measures - said in a televised address last night that the request for a bail-out was the country's final option.

Portugal becomes the third European country to ask for financial assistance, following Greece and Ireland.

The UK will not be providing direct financial assistance in the form of bilateral loans like it did for Ireland, but it could contribute up to £3.7 billion through its commitment to the bail-out fund that originally helped Greece.