Portugal Next to Resist Eurozone Austerity Measures

 
on April 08 2013 8:27 AM

The euro traded steadily at $1.30 on Monday morning after gaining 1.3 percent against the dollar after a disappointing jobs report from the US last week.

This week US Treasury Secretary Jacob J. Lew will meet with European lawmakers to discuss strategies to promote economic growth and resolve the eurozone's debt crisis.

Lew's first stop will be Brussels where he will spend time with central bankers and European Union officials. He is expected to push for more economic stimulus measures rather than the current, German led, austerity centered approach.

The eurozone was in a precarious position after uncertainty flooded the market after the botched Cypriot bailout in March. After the EU proposed raising funds for the nation's bailout by taxing all Cypriot account holders, Cyprus' parliament rejected the bill and shook investors' confidence in the region.

Bloomberg reported on Monday that Portugal's Constitutional Court has turned down EU mandated budget cuts that would affect payments to both state workers and retirees.

Prime Minister Pedro Passos Coelho promised to slash spending elsewhere to compensate for the rejected cuts. Portugal is already struggling with sky high unemployment and lower demand from its European peers as its government works to meet the conditions of its 78 billion euro aid package.

The Portuguese court's decision to bock the EU mandated cuts has emphasized the growing resistance to austerity measures within the eurozone.

With Italy still unable to form a government after an inconclusive election and Portugal seemingly following in Cyprus' footsteps, many are worried that the eurozone is teetering on the edge of a meltdown.

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