Not too long ago, Portugal stood on the brink of catastrophe: harsh austerity policies and the erosion of labour rights pushed by the conservative government lead to significant rises in poverty and unemployment. The economy dwindled due to the lack of peoples’ spending power.
Today, everything has changed:
“Nowadays, Portugal is considered a prime example among European countries: the economy is booming, unemployment is dropping and investments are rising.”m
What are the reasons for this turnaround? What makes Portugal special when compared to other countries?
Turning point 2015: Famous Lisbon mayor Costa is elected prime minister
The first major change occurred during the general election 2015. This was time when the right wing conservative government dismantled the social welfare state piece by piece, which resulted in a furious population voicing their dissatisfaction in the voting booth – causing the conservatives to lose 11 percent of their previous electoral votes.
Lisbon’s former mayor António Costa, a socialist, won by a landslide and brought in 32 percent for the Partido Socialista after being elected frontrunner a year prior and uniting the entire city of Lisbon during his time as mayor.
At first, Portugal was said to have made a grave mistake
Costa succeeded in uniting the severely split left wing in Portugal, who supported the minority government led by him. At first, observers were pessimistic about the potential of this constellation, predicting a collapse after a few months. Moreover, both the EU and German minister of finances saw a grave mistake in the departure from austerity. „Angela Merkel described the prospect of a radical anti-austerity coalition in Portugal as “very negative”. The president of Portugal went further, calling non-conservative economic policies a “danger to national security” and attempting to keep the old government in power.
Miraculous economic recovery
It’s been more than four years since the socialist party assumed the reins of government. The scepticism of the early days has virtually vanished. The entirety of Europe seems impressed by the success story of António Costa:
The Portuguese economy has been booming for 4 years. 2017 marked the largest national economic growth of the century.
The Portuguese are not only showing the feasibility of socially conscious policies, but demonstrating the significant potential for success.
“The budget deficit has dropped to its lowest ever since the change to a democratic system in 1974 – simply because the government re-established and strengthened the social welfare state, leading to the Portuguese people having more money to spend.”
The socialists raised the once slashed wages and pensions, reintroduced paid vacations and retracted many tax raises, all while raising wealth taxes which affect only the rich parts of the population. The government also introduced a property and real estate tax designed not to target the homes of average citizens. Costa’s socialists also put an end to the catastrophic privatizations that were once instructed by the EU and resulted in selling state assets at absurdly low prices.
“The assumption that one could save the economy by aggressively cutting wages and excessively attacking welfare programs was clearly a misconception”, Costa said about his predecessors.
Social Democrats reach 37 percent in parliamentary elections
Portugal’s swift rise from a nation in shambles to prime example is remarkable. Costa gave hope and pride back to the people after the country was shaken to its foundation by the EU’s austerity programs and the failed previous government.
The newfound optimism also influenced the outcome of the 2019 parliamentary elections
His Socialists (PS) won the parliamentary elections in Portugal with 37 percent – well ahead of the conservative Social Democrats (PSD). They finished second with 28 percent of the vote, Costa won over 4 percent and came first. The number of socialist MPs rose from 86 to 108, with the socialists winning 15 out of 20 constituencies – 8 more than in the 2015 general election.
A nation without right wing populists
In the current political climate, which is full of optimism, the Right cannot get a foothold –patriotism as is claimed by the Left.
“If young Europeans are radicalized in city districts that were economically left behind, we have to answer with social policy measures”, Costa summarized his agenda in an interview with the german newspaper „Spiegel„.
Young Portuguese citizens abroad are being brought back
Nowadays, the political and economic climate under the socialist government is attractive enough to make citizens abroad consider returning to Portugal. When the conservatives were in power, tens of thousands of young citizens – some of whom were very well educated – left the country due to a lack of jobs and perspectives.
“My predecessors caused the greatest wave of emigration ever since the 1960s”, Costa stated.
The economy crashed, almost half of the young Portuguese was unemployed – setting a sad record. Portugal was facing the risk of losing an entire generation.
By now, 2.3 million Portuguese live abroad, but the government led by Costa is set on bringing them back. “This is the only way to combat the demographic decline, revitalize our economy and securing the continued existence of our social welfare programs”, the state secretary responsible says. To ensure this, the government organized programs and created networks abroad. Additionally, temporary tax breaks for returning citizens are planned.
The high rate of unemployment among the general population hovering at 17 percent under conservative rule was reduced by a staggering 10 percent, and it continues to drop.
20 billion Euros are being invested
The remarkable economic growth of the past years is to be only the beginning. Under socialist rule, the economy grew so significantly that the money made is now set to be invested and returned to the general population. Portugal’s government plans to use the rising public sector revenue to transform the nation into a more just and modern one, after the conservatives destabilized the infrastructure.
Costa presented a nation-wide investment proposal and surprised many once again: 20 billion Euros is considered an incredible amount of money for a country the size of Portugal. 60 percent of the funds is to go towards public transportation. The remaining money will be invested in the energy sector and environmental projects.
New subways, new trains
The much-used railway line connecting Lisbon and Porto is to be modernized, urban subway networks are to be expanded and public transportation in rural areas is to be invested in. This will generate new jobs, revitalize the economy and lift public transportation onto a state-of-the-art level. Furthermore, Portugal will become more eco-sensitive in the process. And Portugal did all this with a solid budget – in 2019 it even achieved budget surpluses.
Source: Kontrast.at / Creative Commons Lizenz CC BY-SA 4.0