Portugal's MPs today voted on and approved the Socialist government's anti-austerity programme with the left-wing parties backing Prime Minister António Costa in the first test of his new political arrangement.
Costa’s far-left alliance parties warned that they all have high expectations that the reversing of the Passos Coelho austerity programme will free up the economy.
Now that the programme has been voted in, António Costa has free rein to push forward with legislation, much of which is to unravel the fiscal chains that none-the-less have kept the country on track with Troika repayments, at the expense of a largely over-taxed and increasingly poor population.
During today’s debate, the Left Bloc leader Catarina Martins said that restructuring Portugal’s international debt is inevitable. This is the first major area of difference between her party and the Socialists, but one that can be kept under control, for the time being anyway.
There will be pressure from the left, this was always going to be a side-effect of the Socialist deal to get into the driving seat, especially from Martins who, riding high in a recent international ‘movers and shakers’ poll, wants more radical economic policies to reflate the economy by cutting taxes and boosting domestic demand.
Costa needs to keep Martins from doing any real damage while remaining wary of the lurking threat from Passos Coelho and his coalition partner Paulo Portas. Passos Coelho said today that the Socialist plans were experimental and would deter overseas companies and investors from Portugal and ultimately cause taxpayers more harm than good.
Then there is the Communist Party whose vehement dislike of the Socialists only recently has been kept under control.
Communist spokesman João Oliveira said today that, "The Socialist government programme is not the Communist Party programme, we are here to contribute so that policies can be altered.”
Policies that give families more of their own income to spend, a Thatcherite tenet, and helping the poor, are areas of common ground but Costa’s promises to renationalise state assets sold off by the previous right-wing government may be the first real test of how far left of centre the Socialist Party really is when it comes to the reality of funding the country’s social, health and education programmes, all of which are expecting increased budgets.
Comments
My suggestion is for freeing up the local fairs and markets so the most disadvantaged can be buying and selling at the lowest possible price. Thatcher was also strong on 'light regulation' which is unheard of here. Either there is no regulation at all for some or all - or the iron jackboot is on your neck stopping you breathing.
Keep in the frame that each day Portugal 'owes' several millions more to the 'lenders'. The ECB may well be implying it is the guarantor of Portugal's ongoing borrowings, to avoid another Greece, but it cannot be pushed too far.
However, nationalization of loss making industries makes no sense for anyone [except some dreaming overpaid TAP employees perhaps].
Hopefully the new government will look into and reverse some of the suspicious contracts signed by the last one; but most important for the economy is to really reduce the bureaucratic nightmare that is Portuguese middle government; let small business get to work and keep a little of the profits for themselves.