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Portugal's government precarious, income gap widens

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By Adrian Lancashire
Portugal's government precarious, income gap widens

As the cheering dies down, Pedro Passos Coelho’s victory is laced with defeat after Portugal’s legislative elections a few weeks ago (Oct. 4th).

He lost his absolute majority and so finds himself in a position of weakness. His centre-right government may be short-lived, even with the blessing of President Aníbal Cavaco Silva.

The president justified his reattribution of the prime minister’s role to Coelho as traditional.

He said: “In 40 years of Portuguese democracy, the responsibility of forming the government has always been handed over to those who have won the elections.”

The leader of the Socialist party, António Costa, does not accept this. He is in a position to form a government with the far left. That comes with some risk but is backed by the right numbers.

The president does not approve.

Costa warned: “It is incomprehensible to nominate a prime minister who the president already knows does not have and will not have the conditions to form a majority in parliament.”

Costa and his allies could topple Coelho’s government if it sticks to the austerity policy with which it steered the country through three years of recession.

So Portugal is perched on the edge of political instability which is wobbling on a fragile economy.

Its debt is among Europe’s highest, after Greece and Italy — 129% of GDP — with a 7.2% deficit in 2014 (EU rules prescribe a 3% maximum). It is looking at around 1.6% growth this year.

Portugal was weaned off the international bailout program in May 2014 but four years of chafing austerity has increased income disparity.

The gap between the highest and the lowest incomer earners has widened.

One in five Portuguese (19.5%) live below the poverty line with an income of less than 5,000 euros per year, barely more than 400 euros per month. To them, Portugal’s improving economic figures do not mean anything.

The unemployment rate has fallen to 12 percent from 17.5 at the peak of Portugal’s crisis, but experts say it is mainly because around 500,000 Portuguese have left their country.