Walking round Porto, Portugal’s second city, over a long weekend, one is struck by how little the country’s near bankrupt economy is affecting daily life on the street.

Porto - this might be as good as it gets

Restaurants on the riverfront overflow with visitors from all four corners of Europe, two shiny new cable cars ply their way up the steep hills leading off from the river, and a slick new metro whisks commuters from their homes in the outlying suburbs to the hustle and bustle of the business district.

Even the May Day parades, whilst as noisy as ever, seemed to fail to rouse much excitement on a sleepy Sunday morning.

And yet this is a country that has gone cap in hand to its fellow Eurozone members and the International Monetary Fund (IMF), with a bailout plan likely to total in the region of €80 billion.

Always one of Western Europe’s poorest countries, Portuguese citizens will very soon be hit with paying back a loan to their richer neighbours which they can probably ill-afford.

Whilst German taxpayers can therefore rest easy, the old and the soon-to-be old in the poorer districts of Porto must start to scrimp and save already as pensions look set to shrivel like the sardines on the tourists’ plates.

Meanwhile Porto’s lively student fraternity must fear for their future employment just as their local drinking holes must fear for their business.

New elections will be held in early June after the incumbent centre left government resigned its post following its failure to push its austerity package through Parliament.  Any incoming government will therefore face significant pressure not to introduce cuts – and yet further delay will only deepen Portugal’s troubles.

Is default a distinct possibility? And who will be next? Perhaps Belgium, the home of the EU institutions and currently without a government for a world record 11 months?

With countries seeming to fall like dominoes, it must be asked how long the Eurozone can continue to bail out ailing Member States without permanently damaging the Euro’s image both at home and abroad. Perhaps it is already too late. Certainly political will in Europe seems to be at breaking point already, and the end is not yet in sight.

Whatever happens, it is likely that the May Day parades on Portugal’s streets will be bigger and noisier next year.

– Rob