February 2016. The Portuguese socialist government, supported by the leftists of the Bloc de Esquerda (BE) and the Communist Party (PC), staggered after presenting its first budget to Brussels, three months after Antonio Costa of the Socialist Party ( PS), was invested as prime minister. The stock market had one of the strongest declines in recent years, the risk premium soared to 400 points – it is currently in the 153 – and the EU believed that the new government would fail to meet the objective of budgetary stability.
The then almighty German Finance Minister, Wolfgang Schäuble, challenged Costa for "worrying the markets" and predicted a new rescue for Portugal. Mariano Rajoy, president of the Government at that time, also jumped on the bandwagon to warn of what could happen to Spain if the left reached the Government. Today, Rajoy is out of Spanish politics – the PP outside the government – and Schäuble, relegated from the Ministry of Finance after directing it for eight years between 2009 and 2017.
Brussels, however, now praises Portugal. The EU values, among other measures, that Portugal has reduced the deficit, which has gone from 2% in 2016 to 0.2% foreseen for 2019, as predicted by the European Commission. Also the rise in GDP, which was 1.5% in 2016, of 2.5% in 2017, and will be 2% in 2018, according to the forecasts of the Bank of Portugal.
While the left supports and underlines its influence to achieve measures such as the rise in the minimum wage to 5% per annum, well above the rise in prices. "We take the minimum salary from 500 euros in 2015 to 600 for 2019", Jorge Costa, BE deputy, is proud.
The Socialist Party moves with precision, but not without friction, between Brussels and the Portuguese left. It is not combative enough as the BE and the PC would like, nor is it so rebellious for the consideration of the EU and the markets. The name of one of the architects of this balance between social spending and austerity is Mario Centeno, Portuguese Minister of Finance and, also, President of the Eurogroup since January.
The Government, initially referred to disparagingly as geringonça -what would be the equivalent of a Frankenstein government- came to be defined as the "Portuguese miracle" due to the economic recovery, as you remember Patricia Lisa, researcher at the Elcano Royal Institute and representative of the Portuguese Government in international negotiations.
Another data that supports this vision is the reduction of the unemployment rate, which reached maximum levels in 2013 at 16% and which will fall to 7.9% in 2018, according to the forecasts of the Bank of Portugal.
The reaction of the investors also changed. The performance of the Portuguese ten-year bond went from 3.9% in February 2016 to 1.88% today and is 0.32%, one of the smallest between the Portuguese country and Spain. And very far from the Italian bond, which is 3.29%.
But this new political experiment is not without criticism. Angel Rivero, professor of Portuguese politics at the Autonomous University of Madrid (UAM), believes that Antonio Costa benefited from the measures taken by the previous government, led by the right-wing Pedro Passos Coelho, of the Social Democratic Party (PSD).
"There has been continuity, not rupture," he says. And he points out that there was already a decrease in unemployment and GDP growth in the PSD Government. The professor of the UAM, in addition, maintains that "Portugal is far from recovering the levels prior to the crisis." But Jorge Costa does not hesitate to say that the Portuguese country "is not that far" and that it is on the right track.
The Socialist Party, firm
The PS does not stop growing in the polls since who came to the Government and would be close to reaching an absolute majority in the 2019 general elections. The latest Eurosondagem survey, this month, places the formation of the Prime Minister, Antonio Costa, with an intention to vote of 41.8%, eight points more than those obtained in the general elections of 2015.
The right, on the other hand, is experiencing a leadership crisis that led to the election of the former mayor of Porto Rui Rio as president. So far, it fails to regroup to the center right. The surveys place it at fifteen points of the PS, with 26.8%.