Last week parliament rejected the proposed budget following weeks of negotiations between the minority Socialist government (PS) and the members of the other political parties, with the budget failing by 117 votes to 108 with five abstentions.

While it had been widely expected that the budget would fail to be approved, the lack of support from the leftist parties has left the political situation in the country very unstable, particularly due to the economic reality of Portugal following the Covid-19 pandemic.

Following the vote, current Prime Minister António Costa stated that his “conscience is clear” as he felt that he had done “all I can do” to make the budget work and to move forward, before adding that “the last thing that Portugal needs, and the Portuguese deserve, is a political crisis at the moment”.

However a political crisis has followed, with President Marcelo Rebelo de Sousa stating that after talks with all the political parties he is likely to call an election, two years earlier than initially planned.

A firm date for the election at the time of going to press, had not yet been announced, however it has been muted that the election could take place on 16 January if all parties are in agreement, with an announcement form the president on the matter planned to be announced to the people of Portugal during the evening of 4 November.

Left in limbo

Commentators have highlighted that the current situation leaves Portugal in a state of limbo, with a new budget only expected to now be approved in the spring of next year.

While it is widely predicted that the PS Socialist party will once again win the election they are not expected to be able to gain an all-important majority, while the rise of the right has been triggering concerns. Francisco Pereira Coutinho, a professor of constitutional law at Lisbon’s Universidade Nova, told The Financial Times that “concern is also growing that far-right populists will make gains in the election, complicating coalition building and damaging the image of a country that had prided itself on being a European haven untroubled by such political movements”.

He drew special attention to the Chega party who he believes are likely to increase their share of the vote “enormously” despite currently only having one elected deputy, the leader of the party André Ventura. “Chega has the most to gain from this crisis and the way that affects the election outcome could create difficulties,” he said.

While the Chega party is predicted to make gains, the fate of the other main parties in Portugal is not looking so promising as both the left wing parties of the Left Bloc and the Communists are predicted to see declines in support, while the centre right PSD party is currently embroiled in a leadership battle which has detracted attention for the current situation.

All eyes are now firmly on Portugal, to see what exactly the next step will be and whether stability, both political and economic, can be brought in at a time when aid from the European Union to the tune of €45 billion, to boost the country following the pandemic, wait in the wings.