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Portugal finally admits that it needs a bailout from the EU;
Spanish Economy Minister: Contagion is “absolutely ruled out”
Last night Portugal’s caretaker Prime Minister, Jose Socrates, announced that he had asked the EU to bail out Portugal. In a televised address on Wednesday night, Sócrates said: "I want to inform the Portuguese that the government decided today to ask ... for financial help to ensure financing for our country, for our financial system and for our economy. This is an especially grave moment for our country". He added, "Things will only get worse if nothing's done." The exact details of the bailout are still unclear, but Portugal would need between €70bn and €90bn to cover its funding needs for up to three years. Open Europe’s findings that the UK could be liable for between €945m and €4.3bn in a €70bn Portuguese bailout, were cited in the Guardian, Mirror, Metro, Spanish economic daily El Economista, on Politics.co.uk and PA. The response by financial markets to the announcement has been fairly muted since most investors accepted a bailout as inevitable and had already priced it into their investment decisions.

There are discussions over whether Portugal would be able to receive a condition free bridge loan to tide them over until a new government is in place. However, AFP reports that Germany and the European Commission have made clear that any loans from the bailout funds would come with strict conditions. Therefore, it is still unclear who will negotiate the bailout for Portugal and how they will enact the necessary austerity measures.

Portugal’s troubles have also firmly shifted the spotlight onto Spain, given the links between the two economies. An article in El País, carrying the headline “Who’s next?”, argues: “Spain is too big to fail and too big to be saved. Hence, the possibility of an attack on Spanish debt would actually pose a threat to the euro as a whole”. Elena Salgado, the Spanish Economy Minister, said today that the risk of contagion "is absolutely ruled out...it has been some time since the markets have known that our economy is much more competitive.”
FT FT 2 Independent Guardian Guardian 2 BBC: Mason's blog FT 3 Independent Mail FT 4 FT: Editorial Guardian: ElliottGuardian: Editorial Guardian 3 Independent: O'Grady Guardian: Pratley BBC BBC: Mason BBC: Peston Coulisses de Bruxelles El Economista El País 2 WSJ IHT Irish Times Telegraph Telegraph 2 Telegraph: Reaction EUobserver AFPFocus Welt Sueddeutsche Spiegel BBC: Today BBC: Today 2 Les Echos Diário Económico Diário Económico 2 FT Alphaville El País Irish Independent Irish Independent:Oliver FAZ FTD: Ehrlich Deutschlandfunk Spiegel Politics.co.uk

Expected ECB rate rise to deal blow to eurozone periphery 
The ECB is expected to raise eurozone interest rates this afternoon, which investors have warned will choke any prospects of growth in the peripheral economies of Ireland, Greece, Portugal and Spain. The FT quotes Philip Isherwood, equity strategist at Evolution Securities, saying, “They are the collateral damage in the war on inflation, and in the eyes of the ECB it is a price worth paying”. In El País, columnist Xavier Vidal-Folch looks at the possible impact of the rate increase on Spain’s economy and argues, “If it goes normally, it will cause pain. If it goes wrong, it will deal [Spain] a blow.”FT Deutschland comments that the expected increase “could divide Europe”. The article notes that 99% of Portuguese and 90% of Spanish mortgages are on variable rates, with an interest rate increase likely to push homeowners’ payments higher.
Irish Independent Irish Times FT: Analysis Le Figaro: Robin SVD El País: Vidal-Folch FTDWSJ Reuters

MEPs vote to increase their 2012 budget and reject proposals to fly economy class
EUobserver reports that MEPs have said the European Parliament's budget should be increased by 2.3% in 2012. MEPs also rejected an amendment to save money by ensuring flights under four hours were carried out on economy class, citing procedural reasons. At present, MEP travel is reimbursed to the level of a business class flight or a first class rail ticket. The rejected amendment would have saved between €15 and €20 million a year, according to the MEPs backing it. Open Europe's Pieter Cleppe was interviewed by Euradionantes, lamenting the decision, saying that “MEPs always talk about ‘solidarity’ but then fail to show any solidarity with hard pressed European taxpayers."

Meanwhile, the head of the EP’s Budget Committee, France's Alain Lamassoure, was joined by ex-Belgian Prime Minister Guy Verhofstadt calling for EU carbon, sales and financial transaction taxes to fund the EU budget post-2013.
EUobserver EurActiv France

The FT notes that European banks have raised nearly €25bn since the start of the year, ahead of EU stress tests due to be published in June.
FT WSJ

EU figures released yesterday revealed that last year EU member states failed to hit the collective target of 0.56% of GNI for aid set in 2005. EU Development Commissioner Andris Piebalgs warned that failure to hit aid targets would mean that “we will face the consequences: permanent instability, military conflicts, war.”
Guardian EUobserver Commission press release

Italian Interior Minister Roberto Maroni has said that a decree will be signed today giving Tunisian migrants who reached Italian shores over the past weeks temporary residence permits allowing them to move to other countries within the EU’s border-free Schengen area.  
La Repubblica Asca Express Focus

A Handelsblatt article under the headline “Who will protect industry from climate protection?” notes that the German government’s plans to enhance climate protection – driven by the EU’s emission targets – are endangering Germany's industrial core.
Handelsblatt

EUobserver reports that a Hungarian junior minister, speaking on behalf of EU Foreign Minister Catherine Ashton, has said that military intervention in Bahrain, Syria and Yemen is “a possibility”. The article notes that Ashton occasionally asks people from the rotating EU Presidency, currently held by Hungary, to step in when she is busy.
EUobserver

UK

The Mail notes that David Cameron and Vince Cable will today invite people to rip up thousands of ‘pointless’ rules and regulations holding back enterprise, promising a “red tape revolution”.
Mail

New on the Open Europe blog

The Portuguese bailout: What are the options?
Open Europe blog

Lords discuss the Government’s EU bill: A bizarre evening in the House of Lords
Open Europe blog

A bridge loan is not the solution to Portugal’s problems: A bridge to nowhere
Open Europe blog