Portugal’s Prime Minister resigns over debt vote defeat

Portugal’s Prime Minister has quit after the nation’s parliament voted against the latest round of austerity measures.

All opposition parties rejected the government’s latest proposal for spending cuts and tax hikes in a binding parliamentary vote.

Prime Minister Jose Socrates previously said he would no longer be able to run the country if the plan was defeated.

The setback could thwart efforts by European leaders to persuade nervous investors that all is well in the eurozone and doom Portugal to accepting financial assistance like Greece and Ireland last year.

Many analysts expect the government’s parliamentary defeat to lead to elections in May or June.

Debt woes, and differences over how to tackle them, also brought down Ireland’s government earlier this year, forcing an election that was won by the main opposition party.

Portugal is one of the 17-nation eurozone’s smallest and frailest economies, growing at a meagre rate of less than 1% a year over the past decade when it amassed heavy debts.

Finance Minister Fernando Teixeira dos Santos said the political crisis could bring a bailout closer and lead to even greater sacrifices for the Portuguese.

The government’s latest austerity package is its fourth set of measures in 11 months.

It has introduced tax hikes and pay cuts that have angered trade unions and prompted a wave of street demonstrations and strikes.

Opposition parties say the government’s latest plan goes too far because it hurts the weaker sections of society, especially pensioners who will pay more tax.

The package also introduces further hikes in personal income and corporate tax, broadens previous welfare cuts and raises public transport fares.

Social Democratic lawmaker Luis Montenegro said his party had the “patriotic duty … to stop the Socialist government going down the wrong, dead-end path”.
Source: Sky News