On 5 April the Portuguese constitutional court ruled that some of the sweeping new government cuts (to holiday bonuses for civil servants and pensioners, unemployment and sickness benefits) were unlawful (5 April) were unlawful.
But Prime Minister Pedro Passos Coelho responded by reiterating his right-wing government’s intention to make the cuts. He says cuts are obligatory under the terms of an €78 billion EU/IMF bailout deal.
The court held that the tax rises which will take place under the 2013 budget are legal.
The government survived a no confidence vote on Wednesday 3 April, tabled by the Socialist Party. The Socialist Party had asked the EU for a bailout in March 2011, but now they say Coelho’s Social Democrats, the main governing party, are cutting too fast. Since 2011 €13 billion in cuts — the equivalent of 8% of output — has been made.
There have been big street protests against the cuts and in November there was a general strike by workers demanding an end to economic hardship.
There were 3,000 demonstrations in Portugal in 2012, compared with 708 in the previous year. There is a continuing campaign against water privatisation. And the latest anti-government strikes, in March, involved many thousands of workers across the country and included rail and airline strikes.
Official forecasts suggest the Portuguese economy will shrink by 2.3% this year, following a 3.2% contraction in 2012.
Unemployment in the Euro-area reached a record high at the start of 2013, at 12%, or 19.1 million workers. Particularly badly hit are Greece, Cyprus, Spain and Portugal. In Greece and Spain youth unemployment is over 50%. And in Portugal the general jobless rate is now 17%, or nearly one million people.
More than 2% of Portugal’s population — mainly young and well-educated people — have emigrated in the last two years.