Europe's rocky road out of crisis

The European Central Bank is raising rates just as its member countries go to the brink of bankruptcy. So is it doing the right thing? David Stevenson reports.

The emergency is over. At least, that's how the European Central Bank (ECB) sees it. While the Bank of England has so far refused to raise Britain's key interest rate from its current historic low of 0.5%, the ECB has decided that crisis-era interest rates are no longer necessary. Last week it raised its official interest rate for the first time since 2008 from 1% to 1.25%, citing inflation concerns.

But in the same week, we had other big news from across the Channel. On the edge of the eurozone, Portugal was finally raising the white flag. In order to keep paying its bills, it was forced to follow in the footsteps of Greece and Ireland, and ask the European Union for a bail-out that could reach as much as €80bn.

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