Fresh questions have been raised about the long-term prospect of the euro as the single currency spiralled to reach a near two-month low against the dollar yesterday.
The euro was down slightly again last night, fuelled by ongoing concerns over Ireland's economy and its government's ability to ride out the storm, as well as jitters over the seemingly unstoppable ripple effect of the eurozone's debt crisis.
While Portugal and Spain are being touted as the next bailout candidates, eyes are also increasingly turning towards Belgium. The country's public debt is around 100 per cent of GDP and it has been coasting without a government since elections in June, thanks to ongoing squabbles between Flemish and Walloon parties over the issue of regional reforms.
"Just like Portugal, Spain and Italy, Belgium is vulnerable as it's not fiscally sound," says Sony Kapoor, managing director of Re-Define, a financial think-tank. "But economic fundamentals no longer matter at a time like this, they become irrelevant. If there is enough panic about a particular country and it gets talked about, then it is becomes a self-fulfilling prophesy."
As the euro crisis began to embroil Ireland in the autumn, Belgium has quietly become another cause for concern in Brussels. One official from a leading EU country said: "It is certainly true that it is being spoken about a lot more and lumped together with the other problem countries."
But the official also pointed out that Belgium was not in the same boat as Ireland, as most of its debt is held internally. "It is a different kind of debt that has much less impact on international investors."
The European Commission has expressed confidence that the euro would bounce back once the bailout plan for Ireland was finalised. "Confidence is not something that comes overnight," Commission spokesman Amadeu Altafaj told reporters. "Confidence is built on decisions but also on the implementation of that decision."
In Berlin, the German Chancellor Angela Merkel told business leaders that the single currency would ride out the storm. "I'm more confident than (I was) this spring that the European Union will emerge strengthened from the current challenges," she said, referring to a €110bn bailout in May of Greece by the EU and IMF.
In Ireland, the government edged towards a crucial budget yesterday as politicians and voters continued to calculate the quantity of pain involved in the tough four-year financial plan unveiled this week.
One Dublin newspaper put the cost of the package's benefit cuts and tax increases at around €4,600 (£3,900) a year for an average family. The mood nationally is therefore tending towards the gloomy.
But although things are changing on a day to day basis, the government declared itself upbeat about the prospects of overcoming its next hurdle, the presentation of a budget due on 7 December.
Finance minister Brian Lenihan, who has held talks with the Irish parliament's parties and independent members, said: "I am quite satisfied from my discussions both with the parties in government and the various public representatives that there is a majority for this budget and that it will pass."
Crisis? What crisis? Quotes from across the eurozone
"We are separated from Ireland by an abyss. This is a country with a low level of public debt." Jose Manuel Campa, Spain's Economy minister
"It's a different kind of debt that has much less impact on international investors." Official on Belgium's emerging debt crisis
"Everyone right now seems to be just praying the problem will go away, there is still very little contingency planning." EU official
"In terms of the economic basis, Portugal cannot be compared with the other countries." Ewald Nowotny, ECB policymakerReuse content