Portugal has become he latest EU country to announce addition austerity measures in an attempt to avoid a Greek-style debt crisis.
Prime Minister Jose Socrates and opposition leader Pedro Passos Coelho agreed to reduce this year’s budget deficit by around two billion euros.
Socrates’ Socialist minority government needs the support of the opposition to pass bills in parliament.
Half the savings will come from spending cuts and the rest from increases in taxes on sales, income and profits.
On the streets of Lisbon, one woman seemed resigned as she said: “What can we do about these taxes? If it’s to save the country, I agree with them.”
A resident of the town of Fatima grumbled: “In the past we had big salaries but not now. There is money but only a few people have it. That’s the problem.”
He spoke as the pope was visiting Fatima; other people there said you have to have faith and Portugal’s government will be hoping that the markets will keep their faith in the country’s financial future.