Monday, June 6, 2011

Portugal swings to the right and braces itself for increased austerity

The pendulum swung even further to the right than predicted. It was the lowest turnout for the Sociatists of any general election in Portugal since 1987.

The number of abstentions yesterday was greater than the number of people who voted for the winning Social Democratic Party (PSD).

Abstentions totalled more than 40%. With less than 39% of the vote, the centre-right PSD will be able to form a government with an absolute majority in coalition with their traditional partners, the conservative CDS, who finished with nearly 12%.

Former Prime Minister José Sócrates stood down as leader of the Socialists who finished with just 28% having won the previous two elections, in 2005 and 2009.

The PSD leader Pedro Passos Coelho now has the task of overseeing tough, wide-reaching and highly unpopular reforms as laid down by the EU and the IMF in return for a three-year €78 billion bailout. Unpopular with the ordinary people, all the main parties supported the international rescue package.

Lower living standards and even greater hardships in one of western Europe poorest countries are now on their way. Tax hikes and welfare cuts are expected. It will be easier to hire and fire workers. And the EU/IMF are insisting on a raft of other measures which will plunge the country into recession for two years.

The new government has a clear mandate to impose this greater austerity. The Social Democrats will have 105 deputies in the 230-seat Parliament compared with 73 Socialists. The CDU will have 24.

Pedro Passos Coelho said last night his government would do everything in its power to overcome the great difficulties facing the country and not be a financial burden on Europe.


In the Algarve, the PSD won 37% compared with the Socialists' 23%. Of the nine Algarve deputies in the next parliament, four will be PSD, two Socialist and one each from the CDS, BE and Communist parties.

2 comments:

  1. '...And the EU/IMF are insisting on a raft of other measures which will plunge the country into recession for two years...'

    Portugal must have reached an all time economic and political low to have accepted this. 'Let's roll over and sign here' might better describe the mind-set of the previous government of Sr Socrates.

    Maybe the new chap will be able to fund some incentives for inbound business, this is what set Ireland in its original economic path, a low corporate tax rate drew in many American companies using Ireland as a gateway to Europe. Sr. Coelho has a few weeks of grace in which to do something inspiring or voters might as well have installed an accountant as Prime Minister to oversee money in from the Troika, two years of recession, and misery across this fair land.

    ReplyDelete
  2. The fundamental and inherent economic problems which beset this very small, non-productive W European country combined with the mindless spending (at least as far as Alagrve is concerned) on shopping complexes, golf resorts, housing developments, etc. which are never going to see a return to profit means that that there is only one way out of this mess - Portugal must abandon the 'single currency' and return to the Escudo and then devalue.

    ReplyDelete