Portugal after the Crisis

An opinion piece by Maria João Rodrigues


Portugal suffered greatly during and in the aftermath of the financial and economic crisis. The country seems to however have managed the difficult situation. The following opinion piece will discuss its implementations for the European Union, as well as for Portugals future.

Portugal was under severe pressure during the financial crisis but the more recent outlook is positive. How has the country managed to do this shift?

Portugal underwent a very demanding adjustment programme, which led to the implementation of various reforms, some of which were too focused on fiscal consolidation and flexibility of the labour market, putting Portugal under very strict conditions to reduce its public deficit rapidly. This had a negative impact on the economy and led to very high unemployment levels. Since 2015, conditions have been improving and Portugal has started to breathe again: the economy is growing, the labour market is recovering and poverty is decreasing. The Socialist Government, in power since 2015, has been implementing progressive reforms promoting investment in education, innovation and a digital agenda, which have contributed to the economic recovery, while being fiscally responsible.

Despite this, Portugal still has the third highest total debt in the Eurozone. What does this imply for the social balance within the country?

Having a high public debt and not having the possibility to use monetary policy at national level (Portugal belongs to the Eurozone) leaves a smaller margin for Portugal to invest. This in turn has a negative impact in terms of economic growth, job creation and social well being of the Portuguese people. Portugal is getting back on track, but the EU, and Eurozone in particular, cannot risk that Member States struggle with such social and economic hardships in face of economic downturns again. In my view, the Euro Area urgently needs two things:

  • a convergence instrument to support Member States when implementing their Country Specific Recommendations, which could be included in the EU Budget connected with the next Multiannual Financial Framework,
  • a stabilising instrument, protecting the Member States’ capacities to continue investing and ensure retraining and basic social protection in face of major downturns.

In the past the party group of Socialists&Democrats in the European Parliament had supported the austerity policy of the heads of national governments. Was it difficult for you to explain this big coalition in Brussels at home?

I do not agree with that assessment. In fact, since the beginning of the EP mandate in 2014, if there was a change in the macroeconomic policy it was due to the pressure and hard work of the Socialists & Democrats key players. We always fought against austerity and we always managed to present an alternative with solid and concrete proposals. As a matter of fact, the support of the S&D Group to the Juncker Commission was under certain conditions, that the European Commission would present a proper investment plan for Europe, a strong pillar of social rights and other proposals with a strong social-democratic DNA.

Recently, you contrasted the crisis response in Portugal to that in Greece. Do you think the Portuguese government responded better?

There are national responsibilities but there are, above all, responsibilities in the way the EU has dealt with the dramatic situation in Greece.

There are several differences between the adjustment programme, which is being implemented in Greece, and the alternative solution, which has been put in place by the Socialist Government in Portugal.

First of all, respect for workers’ rights and their salaries. The Portuguese Government has been implementing policies in view of increasing the available income of the Portuguese population and therefore internal demand, while promoting exports. Also, the Government has been implementing reforms that invest in innovation, education and improvement of the services made available to the population. The economic strategy pursued by the Socialist Government does not subject growth to fiscal consolidation; instead, it fosters growth which can in turn contribute to fiscal consolidation.

Concerning the future of Europe, you have criticised the European Commission’s White Paper for not being decisive enough and have demanded a better delivery of European solutions. What did you have in mind?

None of the Commission’s five proposed scenarios for Europe’s future is fully satisfactory, for many different reasons. The S&D priorities are probably best addressed in scenario 5 (“doing much more together”), it is however unfortunately being communicated as a somewhat extreme option, with a taste of ‘more Europe for the sake of it’. We prefer a different message: better European cooperation (and in some cases deeper integration) is necessary and beneficial not for its own sake, but in order to achieve what citizens need and care about. The 6th scenario should also offer greater clarity on how European integration can be deepened – where relevant – in a genuinely inclusive and open way. It should be called: “Doing much better together on priorities people care about”.

Maria João Rodrigues is a Member of the European Parliament and of the Group of the Progressive Alliance of Socialists and Democrats.