Portugal is going to need a gigantic bailout of at least € 70 billion . The European Financial Stability Facility (temporary rescue facility) is currently at € 250 billion and EU officials want to expand it to € 440 billion. Already € 177 billion has been loaned by the wealthier nations of the EU to bail out Greece and Ireland. What could be the worst scenario in Spain: The Spanish property market would fall so hard that the country's struggling regional banks known as cajas would need more money to cover their losses than the Spanish state can raise. In this case, Spanish banks would need to raise € 100 billion in extra capital. If the state had to provide all those funds, Spanish public debt would jump by about 10 percentage points of GDP. That amount would be challenging for Spain to borrow quickly from bond markets. It would not, however, undermine the State's solvency since public debt stood at just over 60% of GDP at the end of 2010, well below the rate of Germany and other Western nations. On the good side, Spain's budget deficit has gone down from 11% of GDP in 2009 to 9.2% of GDP last year. Spain has improved its credibility with investors by meeting its deficit reduction target. This year's deficit is targeted at 6%, but it might require extra fiscal measures if economic growth disappoints. The economy grew at an annualized rate of 0.9 % in last year's fourth quarter.  Spanish consumer spending is falling due to mass employment (20%) and households' efforts to reduce their debts but Spanish exports are doing better than expected, growing at an annualized 16.6% last year.      

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