Council of State meeting dominated by economic concerns
If the last Council of State meeting between the Prime Minister, government heads and the President of the Republic was partly dominated by the failings of the ‘More Housing’ programme, then Tuesday’s meeting centred on Portugal’s stagnating economy.
According to the latest data from the National Statistics Institute (INE), there was an abrupt slowdown in economic indicators in the second quarter of the year with GDP registering zero growth QoQ, even if the economy grew 2,3% like-for-like on 2022.
President Marcelo Rebelo de Sousa has already opined that there are “international signs that are becoming a bit worrying”, in particular regarding inflation. However, he has remarked that Portugal’s inflation rate is “much better” (I.e, lower at 4.3%) than the overall Euro Zone average of 5.3% but that brings risks to the economy because of those trading partners whose inflation remains higher.
“The European Central Bank (ECB is under pressure to increase interest rates although we hope that they will hold out from doing so in September but if it does this is not good news for 1.8 million Portuguese who have banks loans and see their costs of borrowing go up”, he said in Lisbon.
Another issue on the table is the reduction in IRS income tax, a pledge that is one of the central planks of policy for the opposition PSD party.
Marcelo Rebelo de Sousa has already said that the government has some room for manoeuvre to do so with a budget surplus of €2.1Bn, but to what extent will depend on how the economy fairs over the short term.
Photo: RODRIGO ANTUNES/LUSA