The leaders of the EU's 27 member states gather in Brussels later today, against the backdrop of the collapse of the Portuguese government and resignation of its prime minister Jose Socrates.The summit was supposed to focus on strengthening economic governance, but many issues have been postponed, including a decision on reducing the interest rate on Ireland's EU-IMF bail-out.
The two-day summit was supposed to about stability - drawing a line under the euro zone shockwaves of the past year with the adoption of comprehensive measures to tackle sovereign debt.
But now leaders gather with many of the tough decisions having been postponed, and one of their number - Jose Socrates - acting in a caretaker role. The outgoing Portuguese prime minister had warned of grave consequences if parliament rejected his government's latest austerity measures. But that was how the politicians voted last night.Many observers believe Portugal will inevitably follow Greece and Ireland into a bail-out fund. It also appears that the question of Ireland's reducing its bail-out interest rate is off the table until stress tests on its banks have been completed.