Portugal’s budget deficit overshot its target last year. Revised figures published yesterday showed the country’s deficit was more than a percentage point above target at 8.6 per cent of GDP, bringing the overall debt burden that Lisbon is struggling to finance to 92.4 per cent of its annual output.

Bond markets, which have been pressing the country for months to seek EU and IMF support, responded by pushing yields on its bonds to new euro-era highs and debt agency plans cast a note of doubt over issuance in the weeks ahead.

The minority Socialist government had said earlier this year that the deficit would actually beat the 2010 target.

“These [revisions] are very much one-off factors and don’t have a bearing on the deficit for next year,” said James Nixon, European economist at Société Générale. “That doesn’t mean to say there shouldn’t be a funeral march for Portugal; funding is untenable given where yields are.” – (Reuters)