Portuguese Opposition Aims to Ease Austerity With Dig at Tsipras

  • ``We have to turn the page on austerity,'' Costa Says
  • Prime Minister Coelho will face Socialists in Oct. 4 election

Portugal’s opposition leader, Antonio Costa, said he aims to move beyond austerity, touting his party’s ability to negotiate with the euro area in contrast to the mistakes made by Syriza in Greece.

Costa, who heads the main opposition Socialist party, said he’ll take advantage of the bloc’s more conciliatory stance toward debtor countries to ease fiscal policy should he win next month’s election.

“Syriza adopted the wrong strategy,” Costa said in a debate broadcast by radio TSF Thursday. “Change is achieved through negotiation and not confrontation, and not through an unilateral declaration but in the framework of the European Union.”

While anti-austerity groups like Syriza and Spain’s Podemos have challenged traditional parties in polls as they tapped into voter discontent, the Portuguese look set to stick by the two parties that have taken turns in governing the country since 1981. Costa is neck-and-neck with Prime Minister Pedro Passos Coelho’s Social Democrat-led coalition ahead of the Oct. 4 ballot.

Beyond Austerity

Passos Coelho is completing a four-year term alongside the smaller conservative CDS party during which he completed the country’s EU-led bailout program. Portugal followed Greece and Ireland in requesting a bailout from the EU and the International Monetary Fund in 2011, exiting the program three years later. Greece is in its third aid package since 2010.

“We have to turn the page on austerity,” Costa, 54, said in the debate. “Austerity is a policy that hasn’t produced results in Portugal or in Europe as a whole. We need to reinforce families’ incomes.”

Since losing the 2011 election, the Socialists have voted alongside the ruling coalition on certain key policies including the European Stability Mechanism treaty and the country’s budget framework law. Costa, formerly the mayor of Lisbon, became opposition leader after winning primary elections in September 2014. He was also minister of internal administration from 2005 to 2007.

The Socialists propose narrowing the deficit more slowly than the ruling coalition. The opposition party plans a 3 percent budget shortfall in 2016, wider than the 1.8 percent deficit target set by the government. The Socialists are promising to reverse cuts to state workers’ salaries and to eliminate an income-tax surcharge faster than the ruling coalition has proposed.

Minority Government

The government forecasts the economy will expand 1.6 percent in 2015 and accelerate in the next two years. Gross domestic product grew 0.9 percent in 2014, after contracting in the previous three years. Unemployment will fall to 13.4 percent in 2015, still higher than 12.9 percent in 2011, according to the European Commission’s May 5 forecasts.

“The economy is growing,” Prime Minister Coelho, 51, said in the debate. “We need to provide stability and confidence in the future.” Coelho has said his coalition wants an economic recovery led by exports.

The ruling coalition led the Socialists by 5.6 percentage points in a survey published on Sept. 9 by Jornal de Negocios while the Socialists had a 1 percentage-point advantage in another survey published by Expresso on Sept. 4.

While there are no anti-austerity parties gaining in the polls, Portugal faces the possibility that neither the coalition nor the Socialists will win the election with a majority. Economy Minister Antonio Pires de Lima said in an interview on Aug. 14 that “the lack of a majority will clearly be a cause of instability.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE