Sunday

24th Oct 2021

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

News in Brief

  1. Russia's anti-vax campaign backfired, EU says
  2. China angered as MEPs call for Taiwan talks
  3. Emissions from La Palma volcano reach Brussels
  4. Body of eighth victim of Belarus border-crisis found in river
  5. Report: Syrian bank fiddling currency to evade EU sanctions
  6. Nato adopts plan to counter new Russian threats
  7. Alleged killer of British MP 'felt affiliated' to IS
  8. Coronavirus: Belgium returns to 'red' zone

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew report reveals bad environmental habits
  2. Nordic Council of MinistersImproving the integration of young refugees
  3. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  4. Nordic Council of MinistersCan you love whoever you want in care homes?
  5. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  6. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals

Latest News

  1. EU states want more Belarus sanctions
  2. Gas price spike exposes rift at EU summit
  3. Poland vows not to give into EU 'blackmail' at summit
  4. EU vows to uphold Paris climate ambition amid scientists' fears
  5. Commissions's new migration pact still seeking 'landing zone'
  6. Europe can't ignore Chinese encroachment in Ukraine
  7. Lithuania - where 'biodiversity funding' is cutting down trees
  8. Dutch lawyers take Frontex to EU court over pushbacks

Join EUobserver

Support quality EU news

Join us