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Investors attack stock markets in Portugal, Spain and Greece

The ongoing budget deficit problem which is affecting Greece has seemingly spilled over into Portugal and Spain with investors selling off stocks in these three stock markets due to fears over fiscal stability. The situation regarding Greece is well known, with a budget deficit four times the size of any other in the Eurozone, but Portugal and Spain have seemingly been affected by falling investor confidence.

It would appear that the Portuguese government is paying the price for defeat over a regional Finance Bill, the Spanish government has lost confidence over pension reform and tax officials in Greece have threatened to go on strike over budget spending cuts. This is just the tip of the iceberg as investor confidence continues to ebb away from these three particular countries. This is in reality the first major challenge to the EU authorities, who have already come out in support of Greece and suggested there will be financial backing if required.

However, there will be short-term pain for the Greek population with the International Monetary Fund unwilling to pour money into the system without the authorities taking "very difficult measures". Quite how the EU authorities can regain control of the situation in the short term remains to be seen but unless this is nipped in the bud it has the potential to infect other struggling countries in the Eurozone.

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