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Austerity Hits New Year as Most Portuguese Plan to Stay Home

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Dec. 26 (Bloomberg) -- Most Portuguese will stay home during the New Year’s holiday as higher taxes and wage cuts prompt many in the bailed-out southern European country to cut back on spending, a poll showed.

Ninety-six percent of respondents said they won’t travel during the celebrations, a 4 percent increase from last year, according to the poll conducted by the Institute of Tourism in Portugal. Almost half of those surveyed said the crisis, salary cuts and an increase in taxes were behind their decision.

The survey also showed that two-thirds of Portuguese don’t plan to travel during their vacation period next year.

Prime Minister Pedro Passos Coelho is battling rising joblessness and a deepening recession as he cuts spending and raises taxes to meet the terms of a 78 billion-euro ($103 billion) aid plan from the euro area and the International Monetary Fund. The economy is headed for a third year of contraction in 2013.

The recession is hurting the tourism sector in Portugal. Most companies active in the industry are not making money or have amassed too much debt, Fernando Ulrich, Banco BPI’s chief executive officer, said on Oct. 16. Tourism represents about a tenth of Portugal’s gross domestic product, according to the Economy Ministry.

The survey published today was carried out from Nov. 15 to Nov 30, and 500 valid telephone interviews were used, the Institute of Tourism said on its website.

To contact the reporter on this story: Henrique Almeida in Lisbon at halmeida5@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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