Portugal’s Ruling Coalition Set for Narrow Election Win

Minority government has a dismal history in Portugal and many worry such an outcome could endanger Portugal’s fledgling economic recovery.

The Communist Party wants Portugal out of the eurozone. Things aren’t going to get better.

Portugal’s bailout program, which it completed in May 2014, has not sparked the major unrest that thrust radical anti-bailout parties into the spotlight in Spain and Greece.

Pedro Passos Coelho, Portugal’s prime minister and leader of the centre-right Social Democratic Party, has declared in campaigning for the 4 October general election that the country is in a position to free itself “from the financial dictatorship of numbers” and give “full dignity to politics”. There have been steep tax-increases, deep cuts in welfare rights, pay and pensions as well as changes to labour entitlements.

The economy is now recovering. The economy grew 1.5 percent in the first half of this year compared with the same period a year ago. Economic risks remain as Portugal’s debt load is still one of the highest in Europe, at more than 125 percent of GDP.

At the heart of the campaign is one word: austerity. That rescue averted the bankruptcy that loomed during the eurozone financial crisis as lenders cut off credit – scared away by the country’s massive debts following years of government overspending. Critics of that approach say government spending should spur the growth that will help pay off debts.

The coalition wins enough votes to form a majority government.

Coelho’s government was indeed given a widening lead (39.7%) over the Socialist (PS) opposition (31.6%), according to an average of four polls published on 30 September, but the party looks likely to lose a majority of the 230 seats in the Assembleia da República – its parliament.

“As the leader of a rather liberal, fundamentally pro-European center-left party, Mr Costa’s more abrasive anti-austerity narrative has not paid off”.

Election turnout has declined gradually in recent years and could be still lower this year, not least because hundreds of thousands of Portuguese have emigrated over that time, analysts say.

Polls show the race between the current government and the Socialists is tight, with those rivals together collecting around 70 percent of the vote.

If a minority government is formed and can not pass policies, it would fall, necessitating a new election.