Portugal’s government is proposing fresh austerity cuts, as pressure mounts on Prime Minister Jose Socrates to slash the country’s deficit.
Further belt-tightening should help reassure the markets and Brussels that a goal of reducing the budget shortfall to 7.3 per cent this year can be met.
The measures announced include: a two per cent increase in VAT from 21 to 23 per cent, civil servants’ wages to be cut by five per cent
and a freeze in state pensions.
All require parliamentary backing.
“We need to make this effort in order to balance our public finances, after the serious effects of the worst financial crisis in the last 80 years,” Socrates said, in support of the proposals. “They are essential to defend our country’s international credibility, to assure the funding of our economy, our businesses and families”.
But that argument failed to convince protesters who gathered in Lisbon to denounce the axe being wielded yet again. Workers feel they are being punished for problems not of their making.