Wednesday

22nd Sep 2021

Portugal downgraded amid fears of snap election

Portugal has seen its rating downgraded by Moody's, with the credit rating agency arguing that the country's debt and tepid growth made it a stronger credit risk.

On Tuesday (15 March) the firm pushed Lisbon down two notches, from A1 to A3, and suggested that further downgrades are in the offing.

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

  • Storm clouds brewing over the Portuguese capital (Photo: fnkftw)

The move, which will hike the costs of the country's borrowing, comes as the right-wing opposition officially announced it will not support the government's plans for further austerity.

The capital unveiled the measures, which target healthcare, pensions and welfare benefits, on Friday ahead of a summit of eurozone leaders in Brussels.

The move was intended by centre-left Prime Minister Jose Socrates to both soothe markets and convince its fellow eurozone premiers and presidents of his commitment to meeting deficit reduction targets.

Lisbon has said it will ratchet down its deficit to 4.6 percent of gross domestic product this year and to three percent in 2012, down from seven percent in 2010.

The government is in a minority in the house, with parties to its left refusing to support austerity, and requires the support of the opposition right wing to push through the cuts.

The Social Democrats, which are a conservative party despite their name, have backed three previous rounds of austerity.

However, the latest move produced a firestorm of opposition, provoking the country's largest anti-cuts demonstration since the beginning of the crisis.

Spooking the government, the demonstration, some 300,000-strong according to police and half a million according to campaigners, in an echo of marches and rallies on the other side of the Mediterranean, was organised rapidly on Facebook by a pair of students outside the traditional trade union and left-party channels.

Failure to push through the measures could result in the fall of the government and a snap general election. The Social Democrats have a comfortable lead over their rivals.

Socrates warned on Tuesday that the stalemate could provoke a crisis leading to the country heading to Brussels for a bail-out.

"I am doing what it takes to avoid a political crisis," he told Portuguese television. "I'm sure such a crisis would put into question the confidence of the international markets and would cause us to have to request foreign intervention."

Luxembourg tax scandal may prompt EU action

An investigation into Luxembourg's tax regime has uncovered how the Italian mafia, the Russian underworld, and billionaires attempt to stash away their wealth. The European Commission has put itself on standby amid suggestions changes to EU law may be needed.

Investigation

Portugal vs Germany clash on EU corporate tax avoidance

Portugal's taking over the EU presidency puts the tax transparency law for corporations - which has been fought over for years - to a vote in the Council of Ministers. The resistance of the German government has failed.

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 MinistersNATO Secretary General guest at the Session of the Nordic Council
  2. Nordic Council of MinistersCan you love whoever you want in care homes?
  3. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  4. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals
  5. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  6. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed

Latest News

  1. First refugee deaths confirmed on Belarus-EU border
  2. EU kept in dark on ex-commissioner's new lobby job
  3. Fraud against EU dropped 20% last year
  4. French outrage over US security deal exposes EU frustrations
  5. Auditors slam EU Commission on green investments
  6. Youth migration 'costing West Balkans up to €5.5bn a year'
  7. Central & Eastern Europe: What Merkel did for us
  8. Netherlands against more rights for rejected asylum-seekers

Join EUobserver

Support quality EU news

Join us