Portugal’s ruling party is about to get kicked out of office, just two weeks after forming a minority government.
The centre-right which has held power since 2011 and formed a minority government following elections in early October looks sets to be ousted by an unprecedented coalition between the Socialist Party (PS), and the far left of Portuguese politics.
The Portugal Ahead coalition, led by prime minister Pedro Passos Coelho, gained around 39% of the popular vote at the start of October, but most votes were cast in favour the traditionally fractured left of Portuguese politics. The fractures appear to be healing however, and the left’s union is bad news for the ruling PSD.
The radical Left Bloc (BE) and the Communist party have lent their support to the Socialist Party in a move that, according to the Financial Times, has united the left of the country completely for the first time in 40 years.
Coelho has been prime minister since 2011, and has implemented an austerity program which according to the New York Times “has been held up as a model by creditors and countries like Germany that have advocated belt-tightening in Europe.”
The defeat of the government is set to come on Tuesday when the left wing alliance is expected to table a rejection motion to the government. If the motion passes, which now seems highly likely, it will signal that the government must resign. Following the government’s resignation, Portugal’s president Anibal Cavaco Silva will be expected to appoint a new prime minister.
As the leader of the biggest opposition party, Antonio Costa, who was Mayor of Lisbon until April, will likely be installed as prime minister, and immediately shift the country away from the program of tight budget controls and fiscal discipline implemented by Passos Coelho, to a more expansive fiscal policy.
Amongst the measures supported by the new left-wing coalition are the reversal of public sector wage cuts implemented after Portugal’s bailout, tax cuts, and increasing benefits for Portuguese citizens.
Measures agreed with the BE and Communist parties to get them on-side include bringing back four bank holidays taken away during the country’s bailout, along with reversing the privatisation of Portugal’s national airline TAP-Air, and raising the minimum wage in the coming years.
There are fears from some corners within Portugal that a new left-wing coalition could threaten the country’s economy, which was one of the worst hit during the Eurozone crisis. On Friday, around 100 business leaders in Portugal signed an open letter warning that reversing the fiscal responsibility measures would push up the cost of borrowing “threatening growth, jobs and fiscal stability.”
Both the more left-wing parties support a major restructuring of Portuguese debt and oppose the EU’s fiscal compact. The parties also argue against the country’s membership of NATO.
Despite any fears, president Cavaco Silva will be constitutionally obliged to appoint Antonio Costa as prime minister if Tuesday’s anti-government motion passes.
“Faced with the radicalism of the current [centre-right] government and the brutal measures the country has suffered, there now exists the possibility of rolling back austerity without calling our international obligations into question.”
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