As Angela Merkel addressed the media in Castille, the markets were getting jumpier by the minute. The next day, Portugal was to auction off bonds to pay for debt and it looked like there would be no takers.

The predicted interest rate which would be charged was looking like it could break the 8% barrier – effectively making it an impossible task for the country to borrow off the commercial market.

The media was equally pessimistic, but throughout the whole saga, Portuguese Prime Minister Jose Socrates maintained that Portugal would not need the bailout and that it would be able to buy and sell on the commercial market to refinance debts.

Everyone, from the markets to EU leaders did not believe it, and although France would not comment on the matter, and Germany denied that it had put any pressure on Portugal, it was clear that there were some backroom manoeuvres.

But Portugal did manage to sell its bonds, and at a higher price than anyone could have conceived. In the meantime, it raised capital through loans off the commercial markets at a rate that makes it feasible.

In turn, the stress has now eased. So much so, that the euro immediately climbed against the dollar. The Bank of England, meanwhile held steady. But there is a downside. The battle of Portugal seems to be over – at least for now – but the battle of Spain is yet to begin.

As we were reminded by Dr Merkel on her visit here, many countries have already made great sacrifices in taking austerity measures. This is very true. But Spain has an unemployment rate of over 20%, a budget deficit which was at 12% and climbing at the year end, with austerity measures proposed by the government being shot down left, right and centre. To add to the mix, the trade unions have joined forces and organised strike after crippling strike. Things do not look good. From what sources in Brussels say, it seems that the pivotal point for Spain will come just before summer as debt is set to mature. Asian countries have already pledged to buy Spanish bonds, but just how many? And will it be enough? These are the questions on everyone’s mind.

At the start of the crisis, the EU said it could afford to bail out Greece. Then it said that a permanent mechanism needed to be put in place. From there, the EU said it could afford to bail out Ireland, and even Portugal if the need arose. At first it said it could not afford to bail out Spain, the fourth largest EU market, but it has recently softened its stance in saying that Spain could be done, but that would be stretching things to the limit. It seems like Europe has won a reprieve through the fantastic coup pulled off by Portugal on the markets. Never did anyone think it could be done. In doing so, Portugal has given the euro the chance to live to fight another day.