Portugal quit its 78-billion euro bailout scheme last May, having signed up to a rescue plan in 2011 as its borrowing costs soared. By 2012 they
Portugal quit its 78-billion euro bailout scheme last May, having signed up to a rescue plan in 2011 as its borrowing costs soared.
By 2012 they stood at 18%. Today they are at 2.5% and GDP is forecast to grow in 2015 by 1.6%.
But are people feeling better off? The Troika of international creditors who demanded Portugal bite the bullet of austerity is little-loved, with many saying their loans have placed an unequal burden on the people.
Unemployment remains stubbornly high however, especially among the young. Many young people have left Portugal in search of work.
The years of austerity have wrought profound changes on Portuguese society, Not only is there a perception of a “lost generation” forced abroad in search of work, but some everyday habits have changed.
Restaurants are far less busy, for example, as people have switched to home cooking to save money, robbing Portugal’s urban nightlife of some if its zip. However the distribution of free meals to the poor has exploded, and that is not all four years of hardship have changed.
Dulce Dias, euronews
“Few countries have faced as many challenges as Portugal – it has been 4 years now since the Troika´s bail-out programme.
Portugal went through a harsh economic and financial
adjustment program. A period of austerity measures and massive reforms.
We spoke to the Business Editor Paulo Almoster at a private Portuguese TV channel, TVI. He is well-placed to analyze the changes that have occurred in the recent years.
Could you tell us what has changed, structurally, in the Portuguese administration, in the Portuguese State?”
“Little has changed, structurally, in the Portuguese State. The same happens with the Portuguese economy. In this short period of time we´re not able to see the results of the troika’s program and its structural effects.
But there´s a permanent structural change in people´s lives and in their relationship with the State: the tax increase.
To meet the goals previously agreed with troika back in 2012,
the government implemented a huge tax increase.
Just so you can have an idea, the IRS – which is income tax – increased by about 30 percent.”
“And, will this increase continue? Is it here to stay?”
“The issue is that we don´t have great perspectives. It´s not clear how we will be able to relieve this heavy tax burden in the next coming years. This is because Portugal has signed
some agreements with European terms that force us to pull the debt down consistently over the next 20 or 30 years.
In my opinion, this huge tax increase is here to stay.”
“And how can we see the effects on everyday life?”
“The point is that people are starting to get used to living with less money. The Portuguese are poorer now, really. Wages
didn´t change that much – but we´te talking about wages before taxes. Therefore, net income is decreasing.
And I’m talking about the middle class, the main class that pays taxes.
In terms of consumption, for example, people stopped buying cars, therefore sales have dropped sharply. Car sales are now recovering but the numbers are still very low.
At the supermarket people stooped buying beef. Instead they went for chicken or turkey – a much cheaper option. These are concrete examples of how people have adapted to the situation.
People also began to take their lunch box to work. Restaurants felt the consequences and experienced a profound crisis.
In recent years, Portugal has been the country where the sale of machines to prepare food at home, mixers and the like, skyrocketed to record levels.
People also started taking shorter holidays and to take them in Portugal, instead of going abroad. Obviously, it was good for Portuguese turism – but it was hardly a choice, it was just because people don’t have money.”
“This shift in behaviour is a real mentality change or it’s only temporary?”
“It’s hard to evaluate because it is very recent. And people are still quite upset with the Troika and politicians.
We are going to have elections in September or October, parliamentary elections and that will be the moment to see if people penalize the political parties.
But, when we look at surveys, no scenarios imagine a Syriza like in Greece, or Podemos like in Spain. No protest formations are gaining comparable electoral support, at least according to the surveys.”
“The Troika left Portugal around 6 months ago but the country is beign monitored, until at least 2026. What future do you forecast for Portugal?”
“I forsee that, with the existing compromises, there will be years of permanent austerity because of the promise to reduce the public debt. The state has no way to lower taxes, and no way to raise pensions in a country where the population is growing older very quickly, and quicker all the time.
We saw last year that a large number of young people emigrated. Those people have gone: it was a qualified generation, trained in Portugal but now working abroad.
Older and retired people have stayed. There are more and more of them, and they live longer. Consequently, pensions will be lower and lower and the age of retire will rise and rise.”