Portugal will sink into recession this year and next due to the terms of the €78bn rescue deal, so finance minister Fernando Teixeira dos Santos has said.

He  said that austerity measures that are needed as a condition of the bail out will see the economy shrink by 2% in 2011 and 2012.

Tax rises and privatisations will form part of a major economic restructuring, as well as changes to employment laws and social benefits.

The aim is to cut Portugal's deficit of 9.1% - three times the eurozone's limit - to 3% by 2013, and to make Portugal competitive and promote economic growth.

There is more detail on this subject at BBC News.