On New Year’s Day
Portugal ’s
head of state, President Aníbal Cavaco Silva, had second thoughts about the legitimacy
of the 2013 budget he had signed into law the day before. Critics claimed
that some elements of the budget were unconstitutional. The president decided he
had better refer the matter to the country’s highest court.
Cavaco Silva, a former professor of economics and former leader of the centre-right PSD party,
expressed concern that while everyone would be affected by the proposed hikes
in taxes and cuts in welfare payments, some would be “more penalised than
others.”
He also noted that
“Portugal ’s
foreign debt, now twice as high as the country’s annual output, is
unsustainable.”
In a television address he added: “Fiscal
austerity is leading to declining output and lower tax revenue. We must stop
this vicious circle.”
The centre-right government of Prime Minister Pedro Passos
Coelho has argued that the highest tax increases in living memory contained in
the new budget are necessary to meet the terms of the country’s eurozone
bailout. That he was “profoundly isolated” in his pro-austerity stance was one
of the least impolite remarks any of Passos Coelho’s domestic political opponents
could come up with.
“Portugal is a crisis country that is not as much
in the public eye as Greece
for instance, but austerity has the same effect on the Iberian Peninsula,
especially with big neighbour Spain
in crisis too,” commented the Social Europe Journal (SEJ).
“Will the
relevant decision-makers ever notice that their strategy is not working
economically and is more and more undermining democracy on all levels?,”
asked the SEJ, a forum for debate and
innovative political thinking, which addresses issues of critical interest to
progressives across Europe .
In the SEJ’s
opinion, “the year we have just left behind has clearly demonstrated that in the
current European crisis, politics is stretching national democratic orders to
breaking point, especially in crisis countries. Unfortunately, this trend looks
set to continue in 2013.”
According to the
Financial Times: “By approving the budget, but also asking the constitutional
court to vet the measures, Mr Cavaco Silva has avoided a direct political
confrontation with the government while at the same time taking action that
will at least partially appease critics of the austerity measures. However, the
decision is expected to increase political tensions between the president and
the prime minister.”
The Wall Street
Journal said: “If the 2013 budget is deemed unconstitutional, it may complicate
the government's efforts to reduce the budget deficit to 4.5% of gross domestic
product this year, from an expected 2012 deficit of 5% of GDP, part of the
commitments included in a €78 billion bailout agreement with the European
Commission, the European Central Bank and the International Monetary Fund.”
The BBC among
others pointed out that the proposed tax hikes in the latest budget are equivalent to more than a month’s wages whilst Portugal
is entering its third year of recession with an unemployment rate of nearly
16%. Among the country’s youth it is topping 35%.
According to
Eurostat, the EU's statistical agency, some of the unemployment levels are the
highest ever seen in Europe, with Portugal
along with Spain , Greece and Latvia the worse affected.
The latest Gallup poll on the subject found that 89% of adults
questioned in Portugal
thought this was a “bad time” to find a job.
Wishful thinking
maybe, but nonetheless intriguing as we lurch forward into the new year gloom,
7% of Portuguese adults told Gallup they were optimistic about this being a
“good time” to find work.