Portugal’s Prime Minister has been spooked by his own covert policy of issuing positive messages about the economy through his ministers.
Passos Coelho now says that there is “not much room to relax fiscal consolidation,” putting paid to hopes that at last there might be some reduction of Portugal’s penal tax rates that have enabled the State to collect record amounts while continuing to waste it in sufficient quantities to negate any positive affect it would have had on the national debt.
The Prime Minister added for good measure that we all must “maintain a line of discipline and rigour" to fulfill his commitment to reduce the deficit.
The PM has been working with ministers on the State Budget 2015 and appears now to be backtracking along the lines of messages broadcast in the past few months that the economy is going well and tax receipts are at record levels sio tax rate reductions are on the way.
"I will not make any announcements about the proposed State Budget thatis to be submitted to Parliament... what I have said is clear, that Portugal does not have much scope to relax its fiscal policy, which essentially aims to reduce the public deficit."
Passos Coelho he was at an employment summit in Milan and had been quizzed about the fact that France and Italy have asked for more time to meet the budget deficit targets, so why not Portugal?
France says it can only meet the 3% public deficit goal by 2017, instead of 2015. Italy has a deficit below 3% of GDP, and is proposing to have a deficit of 2.8% in 2015, instead of the 1.8% agreed.
Portugal’s deficit, according to the PM, has been agreed and will reach the end of the year at 4% of GDP, adding that the path of deficit reduction is to continue, "this means keeping discipline and rigour in the coming years, not only in 2015."
The State Budget 2015 will have to be submitted to parliament before October 15, and this Saturday the Council of Ministers is to meet to discuss the proposals. With an election year coming up Passos Coelho needs to 'do a Dave ' and turn an entire section of the voting population to his side as did David Cameron in his lauded speech at the Conservative Party conference last month.
The way to do this is as old as democracy itself, people still vote through their pay packets so tax cuts are essential if the current PM wants to be the future PM.
