Friday

25th May 2018

Portuguese PM speaks of 'national emergency' after court ruling

  • Coelho. Hundreds of thousands of Portuguese people took part in peaceful anti-austerity protests last year (Photo: consilium.europa.eu)

Portuguese Prime Minister Pedro Passos Coelho has warned that Portugal risks "collapse," a euro exit or a second bailout after a court ruling which deleted €1.3 billion of austerity measures in this year's budget.

Speaking in a TV address on Sunday (7 April), he used the term "national emergency" three times to describe Portugal's economic situation.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

He said the country's €78 billion EU bailout, agreed in 2011, is needed to "avoid a national collapse" and "for the maintenance of Portugal in the euro area."

He noted the Portuguese state is currently "dependent on the funding of our European partners to make payments, provide services, pay salaries and pensions, to keep the welfare state."

He added that one alternative "would be … to submit to another [bailout] programme."

But he said: "That is what we must avoid … We must do everything to avoid a second bailout. I cannot allow us to waste the sacrifices that the Portuguese people have made in recent years."

The court on Friday rejected four out of nine of Coelho's austerity measures in the 2013 budget.

It struck down cuts to public sector workers' pay and pensions, as well as cuts to unemployment and sickness benefits, calling them "a violation of the principle of equality and the principle of fair distribution of the public burden."

Portugal's top financial paper, the Diario Economico, estimated the deletions will cost the government €1.3 billion in terms of planned savings.

Coelho said in his TV speech that alternative ideas could be new cuts to social security, health and education. He said he will not raise taxes because this would jeopardise economic recovery and job creation.

He noted that he must respect the court for the sake of democracy and rule of law.

But he accused the judges of creating extra "fragility … uncertainty and unpredictability … risk" and said that some constitutional experts disagree with their decision.

He also accused the left-wing opposition of "demagoguery" after Socialist Party leader Antonio Jose Seguro called on him to step down.

"The country needs a different exit strategy from the crisis, one that prioritises economic growth … The country is living in a social tragedy. This needs to change and that change entails substituting the government," Seguro said also on TV at the weekend.

Portugal's economy is forecast to shrink by 3.2 percent this year, while unemployment is to climb from 12.7 percent last year to 19 percent.

But at the same time, spending cuts have seen the spread on Portuguese bonds vis-a-vis benchmark German papers fall from sky-high levels of almost 17 percent to below 6 percent.

For its part, the European Commission in a statement on Sunday declined to give Lisbon any extra leeway.

"Any departure from the programme's objectives, or their re-negotiation, would in fact neutralise the efforts already made and achieved by the Portuguese citizens," it said.

It added that Portugal needs to stick to the deal if it wants lenders to extend their deadline for loan repayments.

German finance minister Wolfgang Schauble told German radio on Monday that "Portugal made a lot of progress in the last few years and is about to gain access to financial markets."

But he also warned that it "needs to take new [austerity] measures after the [court] decision."

Ireland and Portugal set for debt deferral

Ireland and Portugal are to be given more time to repay their emergency loans with both countries seen as good pupils in following the imposed austerity programme.

Portuguese top court strikes again

Portugal's Constitutional Court has for the third time thwarted bailout-related laws, this time overturning a decision making it easier for public sector workers to be fired.

Debt relief talks mar Greek bailout exit

While the Greek government has committed to fulfill the last creditors' requirements in the coming month, Europeans and the International Monetary Fund are still far from an agreement on measures to reduce the country's debt in the future.

EU pessimistic on permanent US trade exemption

EU trade chief said the US will impose tariffs or "other limiting measures" on 1 June, as the EU's offer to start limited trade talks is probably not enough for the protectionist Trump presidency.

Analysis

EU has no 'magic bullet' against US Iran sanctions

EU leaders in Sofia will discuss how they can protect the bloc's economic interests against US threats to sanction companies doing business in Iran. But their options are limited.

Opinion

EU budget must not fortify Europe at expense of peace

Given the European Commission new budget's heavy focus on migration, border management and security, many are asking whether the proposal will fortify Europe at the expense of its peace commitments.

News in Brief

  1. Italy set to pick eurosceptic finance minister
  2. UK foreign minister fooled by Russian pranksters
  3. Rajoy ally gets 33 years in jail for corruption
  4. Close race as polls open in Irish abortion referendum
  5. Gazprom accepts EU conditions on gas supplies
  6. Facebook tells MEPs: non-users are not profiled
  7. Commission proposes ending France deficit procedure
  8. UK households hit with Brexit income loss

Stakeholders' Highlights

  1. Counter BalanceEuropean Ombudsman requests more lending transparency from European Investment Bank
  2. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  3. Centre Maurits Coppieters“Peace and reconciliation is a process that takes decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  4. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up
  5. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece
  6. Counter BalanceControversial EIB-Backed Project Under Fire at European Parliament
  7. Nordic Council of MinistersIncome Inequality Increasing in Nordic Countries
  8. European Jewish CongressEU Leaders to Cease Contact with Mahmoud Abbas Until He Apologizes for Antisemitic Comments
  9. International Partnership for Human RightsAnnual Report celebrates organization’s tenth anniversary
  10. Nordic Council of MinistersNordic Cooperation Needed on Green Exports and Funding
  11. Mission of China to the EUPremier Li Confirms China Will Continue to Open Up
  12. European Jewish CongressCalls on Brussels University to Revoke Decision to Honour Ken Loach