Portugal chose a new centre-right government in Sunday’s elections. The country is submerged in debt and knows that higher taxes, spending cuts and privatisations are in store. But the PDS Social Democratic Party won a convincing victory with 39 percent of the vote. That put an end to political uncertainty, following the collapse of the minority Socialist government in March when it failed to pass austerity measures.
Prime Minister-elect Pedro Passos Coelho said he was “absolutely” committed to the terms of a 78-billion-euro bailout and might pursue austerity measures beyond those required in the pact with the European Union, European Central Bank and International Monetary Fund lenders. He said: “We don’t want to weigh down our partners for a second more than necessary.”
This went some way towards reassuring the markets. Portuguese stocks opened higher the day after the election, and analysts expected investors to react positively.