Monday

2nd Oct 2023

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."

Analysis

Is the ECB sabotaging Europe's Green Deal?

The European Central Bank (ECB) recently raised interest rates to the highest point in the currency's 21-year existence — but the effects of its policies on renewables are badly understood.

IEA says: Go green now, save €11 trillion later

The International Energy Agency finds that the clean energy investment needed to stay below 1.5 degrees Celsius warming saves $12 trillion [€11.3 trillion] in fuel expenditure — and creates double the amount of jobs lost in fossil fuel-related industries.

Opinion

How do you make embarrassing EU documents 'disappear'?

The EU Commission's new magic formula for avoiding scrutiny is simple. You declare the documents in question to be "short-lived correspondence for a preliminary exchange of views" and thus exempt them from being logged in the official inventory.

Latest News

  1. European Political Community and key media vote This WEEK
  2. Is the ECB sabotaging Europe's Green Deal?
  3. The realists vs idealists Brussels battle on Ukraine's EU accession
  4. EU women promised new dawn under anti-violence pact
  5. Three steps EU can take to halt Azerbaijan's mafia-style bullying
  6. Punish Belarus too for aiding Putin's Ukraine war
  7. Added-value for Russia diamond ban, as G7 and EU prepare sanctions
  8. EU states to agree on asylum crisis bill, say EU officials

Stakeholders' Highlights

  1. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  2. International Medical Devices Regulators Forum (IMDRF)Join regulators, industry & healthcare experts at the 24th IMDRF session, September 25-26, Berlin. Register by 20 Sept to join in person or online.
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. International Medical Devices Regulators Forum (IMDRF)Join regulators & industry experts at the 24th IMDRF session- Berlin September 25-26. Register early for discounted hotel rates
  6. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch

Join EUobserver

Support quality EU news

Join us