Portugal’s Prime Minister Says Deeper Cuts Coming
Despite two years of corrosive austerity measures since it needed an international financial rescue, Portugal’s prime minister told his country Sunday to brace for even harder times after a court ruling forced his government to find more savings through steep spending cuts.
Pedro Passos Coelho said in a somber televised address to the nation that his center-right government must slash public services because of a Constitutional Court decision to disallow some of its latest tax hikes.
A new crackdown on public spending will focus on social security, education, health services and state-run companies, he said. That is likely to bring more layoffs as Portugal scrambles to restore its financial health after it needed a 78 billion euro ($101 billion) bailout in 2011.
“Today, we are still not out of the financial emergency which placed us in this painful crisis,” Passos Coelho said.
Portugal’s worsening problems threaten to reignite the eurozone’s financial crisis not long after Cyprus became the fifth member of the 17-nation bloc to require rescue.
The Portuguese economy contracted 3.2 percent last year and is forecast to shrink 2.3 percent in 2013 for a third straight year of recession. The unemployment rate, currently at a record 17.5 percent, is forecast to climb to 18.5 percent in 2014.