23rd Mar 2018

Portugal in crisis after 1mn say No to austerity

  • Lisbon protests: 'Politicians are thieves, give us back the hope' (Photo: Pedro Ribeiro Simoes)

Portugal is facing a massive backlash against troika-approved austerity measures to raise social contributions for employees.

Portuguese President Anibal Cavaco Silva is on Friday (21 September) to convene a rare meeting of the state council in a bid to defuse a political crisis linked to the controversial measure.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Over 1 million people took to the streets of Portuguese cities on Saturday in protest at moves to boost social contributions from 11 percent to 18 percent for workers and to lower them from 25 percent to 18 percent for companies.

The change would de facto slash one months' worth of salary a year for each and every employee. Employers are also to be given more leeway to fire people.

Trade unions, the Socialist opposition and the junior partner in the centre-right government coalition have all come out against the measure, part of a package of cuts agreed with the troika of international lenders in return for an extra year for Lisbon to meet its deficit targets.

"This measure completely ruins the political consensus that was behind the bailout programme," Ana Gomes, a Socialist Portuguese MEP told this website.

She blamed the government for tabling the moves, but also the troika for accepting them in the teeth of public feeling.

The scale of the popular resistance came as a surprise, with fellow bailout country Greece normally the one in the headlines over anti-asuterity street protests.

"It is not the fault of the Portuguese, they have accepted everything so far. The troika wanted to show Portugal is a good pupil, compared to Greece, abiding by the book. But the problem is that the book is wrong. Austerity is killing the economy," Gomes aded.

In her view, Portugal should be given even more time to pay off its debt and the interest rate on its loans should be lower.

Currently, small enterprises are paying 5-6 percent interest rate even though banks get the loans from the European Central Bank at one percent.

If the stand-off continues, eurozone finance ministers meeting in Luxembourg on 8 October could in theory delay the payment of the next tranche of Portugal's €78 billion bailout.

"Protests and recent developments are a bit odd as they are in contrast to the latest troika decision to give Portugal an additional year to adjust," said Carsten Brzeski, an economist with ING Bank.

"Portugal is not the next Greece but the dire economic outlook won't make the required adjustment any easier. The latest developments show that the recent calm in the euro-crisis will not last forever and that eventually the destiny of the eurozone is in the hands of governments and voters," he noted.

Trump keeps EU leaders waiting on tariffs

European leaders postponed their reaction to US announcement that the EU would be exempted from tariffs on steel and aluminium. "The devil is often in the details", said the Belgian PM.

VW dismisses complaints on Dieselgate fix

'I think customers who want to get information (...) are able to receive information if they want," VW management board member Hiltrud Werner told EUobserver. Consumer groups disagree.

News in Brief

  1. EU wants 'Paris' climate strategy within 13 months
  2. Workload of EU court remains high
  3. Spain's supreme court charges Catalan separatist leaders
  4. EU calls for 'permanent' exemption from US tariffs
  5. Summit backs guidelines for future EU-UK talks
  6. Macron support drops as public sector workers go on strike
  7. EU leaders condemn Turkey for illegal actions in Aegean Sea
  8. Parliament must publish 'trilogue' documents, court says

Stakeholders' Highlights

  1. EUobserverStart a Career in EU Media. Apply Now to Become Our Next Sales Associate
  2. EUobserverHiring - Finance Officer With Accounting Degree or Experience - Apply Now!
  3. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  4. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  5. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  6. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  7. Martens CentreEuropean Defence Union: Time to Aim High?
  8. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  9. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  10. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  11. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership
  12. EPSUWill the Circular Economy be an Economy With no Workers?

Latest News

  1. Europe needs corporate tax reform - a digital tax isn't it
  2. EU data chiefs rally behind UK over Cambridge Analytica
  3. Russian diplomats risk EU expulsions over UK attack
  4. Three presidents should attend Bosnia memorial
  5. Trump keeps EU leaders waiting on tariffs
  6. EU summit takes hard look at Russia
  7. Germany casts doubt on Austrian intelligence sharing
  8. EU leaders set for 'stormy debate' on digital tax at summit