Which EU economy is next for austerity measures? Financial Times: 23 per cent chance of defaulting for Spain within the next five years

Cost for protection of European bonds have risen dramatically this year. Sixfold for Portugal, fivefold for Greece, threefold for Spain and Ireland. FT calculated the chances of defaulting for these economies from the prices of the corresponding credit default swaps, the maturity and the estimated recovery rate.

Greece has a 54 per cent chance of defaulting within the next five years, Ireland 38 per cent, Portugal 31 per cent and Spain 23 per cent. There are critics of this calculation, but the crucial question is "Which is the next EU economy that needs bailout and what is the impact?".

In terms of GDP and thus bailout impact we are taking about different calibers:

Spain: 1359 billion USD

Greece: 332 billion USD

Portugal: 240 billion USD

Ireland: 172 billion USD

Spain´s economy is almost twice as big as all three combined! That means you should put Portugal and especially Spain on your watch list. If there is a potential bailout, impact on the EU and the Euro will be much higher than from Greece or Ireland.