Portugal has learned the hard way that there are two sides to the euro. In the late 1990s, qualifying to join the single currency prompted an enthusiastic surge of government, corporate and consumer spending, fuelled by historically low interest rates, EU funds and a buoyant international economy.
The euphoria quickly turned sour. Levels of state, company and family debt soared to unsustainable levels. Wage increases unrelated to productivity gains damaged competitiveness. The external deficit spiralled. And when the global economy began to falter, Portugal fell headlong into recession.
