A letter from Lisbon

As Portugal edges towards having to accept a financial bailout, our correspondent warns that rather than signalling the end of a country's woes, such a move is just the beginning of a new chapter in a long and painful process of reform.

    I took a taxi from the airport to my hotel in central Lisbon and asked the driver for a receipt.

    He was a friendly man, and we'd had an interesting conversation. "How much would you like me to write on the receipt?" he asked, with a smile and a wink.

    After cold and proper London, it was a reminder that I was back somewhere ... how can I put it? ... a little more Mediterranean perhaps (and apologies if I've caused offence).
    In fact, Lisbon is one of my favourite cities. I love the old neighbourhoods clinging to steep hills, the architecture, and the little trollies that run up and down the cobbled streets.

    I'm fascinated by the history, and the colonial links with Angola and Mozambique. The people are kind and generous, the food is great.

    But there's no mistaking the mood this time a mixture of seething resentment toward's Portugal's politicians, and grim resignation that bad times lie ahead.
    I've sensed this mood before it reminds me of Greece, in the first months of 2010, as the country slid towards bankruptcy.

    There's the same cynicism about those in power, the same sense of helplessness and frustration ... (and, dare I say it, the same creative tendency towards some aspects of accounting).

    In some senses, Portugal is in an even worse situation.

    At least Greece, under Prime Minister George Papandreou, had a recently elected government with a strong mandate to take firm action to rescue the economy.

    Portugal is drifting following the resignation of Prime Minister Jose Socrates.

    Elections may be weeks away, and could be inconclusive.

    It's true that Portugal's overall debt and budget deficit are smaller than Greece's.

    It's also true that its banks are in better shape than Ireland's, or Spain's.

    But the economic problems here run very deep the labour market is inflexible, and there's little innovation.

    Today I visited an IT company run by a group of young Portugese entrepreneurs.

    They were all extremely bright, capable people, and their company is doing well.

    But they told me of their anger and sense of alienation towards the country's politicians, and their sense of despair as they see more and more of their counterparts looking to emigrate to northern Europe or the United States.
    Today Lisbon's metro was on strike. Yesterday it was the ferries. Tomorrow it will be the trains.

    A growing tide of industrial unrest, as austerity measures get tougher?

    Perhaps, although Lisbon does not have the tradition of dramatic street protest of Athens.

    So where do we go from here?

    The financial markets clearly do not believe that Portugal will be able to generate the growth that will enable it to pay off its debts, and there's now plenty of speculation that the country will need a bailout in the region of 70bn Euros.

    That will raise further questions about the future of weak, peripheral economies in the eurozone, and revive the fears of "contagion" affecting larger economies like that of Spain.

    Unfortunately the lesson for Portugal, from Greece and Ireland, is that taking the bailout option does not signal the end of a country's woes.

    Rather, it's just the beginning of a new chapter, in a long and painful process of reform.


    All Hail The Algorithm

    All Hail The Algorithm

    A five-part series exploring the impact of algorithms on our everyday lives.

    The priceless racism of the Duke of Edinburgh

    The priceless racism of the Duke of Edinburgh

    Prince Philip has done the world an extraordinary service by exposing the racist hypocrisy of "Western civilisation".

    China will determine the future of Venezuela

    China will determine the future of Venezuela

    There are a number of reasons why Beijing continues to back Maduro's government despite suffering financial losses.