A Portuguese Court Just Threw A Wrench In Austerity Plans

LISBON, Portugal (AP) — Portugal’s Constitutional Court has struck down a government measure to cut public sector wages, delivering a setback to the bailed-out country’s efforts to reduce its budget deficit.

Foreign lenders granted Portugal a €78 billion ($97 billion) financial rescue last year to spare the country from looming bankruptcy.

In return for the money, Portugal has to drive down its deficit to 3 per cent of gross domestic product next year. It was 9.8 per cent in 2010.

As part of that effort, the government has scrapped the Christmas and vacation bonuses of public sector workers and pensioners.

The court declared that move unconstitutional late Thursday, saying it contravened guarantees of equality.

The centre-right government says it will now consider extending the deeply unpopular measure to the private sector.

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