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Everyone in Europe has their eyes on Italy's budget, which seems unacceptable to Europe. But this week, much more discreetly, Portugal has released its 2019 budget.

In its 2019 budget proposal, unveiled 48 hours ago, the Portuguese government plans to reduce its deficit to 0.2% of gross domestic product: a record for, brace yourself, 40 years!

All this with a growth forecast maintained above 2%. This is enough to make most European countries dream. And this phenomenon is striking, for several reasons.

First, it's a turnaround: let's look at where this country of 11 million people came from.

from 2011 to 2016, Portugal was in crisis! In 2011, everyone was already announcing that after Greece. That Portugal was next on the list. The country was on the verge of default, undergoing a huge austerity cure and 3 years of recession. All this with an unemployment rate of 17%!

In a very short time, everything was reversed. Unemployment is down to 7%. Forecast for next year: 6.3.

Growth is stable, exports have picked up. The automobile, real estate, textile and tourism sectors are driving the economy. Foreign investments are on the rise.

Debt remains Portugal's biggest problem (the 3rd highest in the area euro). But the situation is improving: 130% of GDP four years ago, 118 expected next year. As a result, the rating agencies have removed Portugal from the "speculative country. Last Friday, Moody's even ranked it in "stable outlook.

This is a spectacular turnaround. Good economic news is too rare in Europe to miss.

A left-wing policy of recovery through consumption

So what is the Portuguese government doing to achieve such a result? For three years, Portugal has been doing everything Brussels hates.

Since 2015, the country has been led by a left-wing coalition: a socialist government supported by communists, ecologists and the local "left front." And not content with calling itself left-wing, it is pursuing a left-wing policy, which has become an "anomaly" in Europe.

In next year's budget, Portugal plans to increase civil service salaries by 3%, create five new hospitals and multiple health centers and improve social protection for families.

In the space of three years, the current government has already :

- Increased the minimum wage, every year;

- Improved small pensions;

- Stopped the privatizations requested by Brussels;

- And reformed the labor code to limit fixed-term contracts.

He also plans to raise taxes on high earners.

It is indeed a left-wing policyThe aim is to stimulate demand and consumption, the opposite of the austerity advocated by Brussels in recent years. And it works!

European discretion

The Portuguese right does not dispute the good results. But for them, these successes are the fruit of the years of austerity that preceded them, austerity that the right had imposed before 2015. In short, the Socialists take the laurels to them. While maintaining a right-wing policy on a key aspect: the control of public accounts.

At the other end of the political spectrum, the government's communist partners and the CGT feel that it does not go far enough. And that small salaries should be increased even more.

In fact, everyone is preparing for the next elections scheduled in a year in Portugal.

But the most revealing aspect of all this is the discretion of Europe.

Brussels is careful not to praise the Portuguese results too ostensibly. 

It is said that this recipe cannot be transposed elsewhere in the Union because the cost of labour remains very low in Portugal and because the country remains a land of emigration.

This Brussels discretion is above all indicative of a form of embarrassment the fact that Portugal is succeeding by doing almost the opposite of what the European Commission is asking.



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