The Secretary-General of the PS Socialist party and current leader of the main opposition party in the Portuguese Parliament, António José Seguro, addressed the American Club on ‘Growth, jobs and responsible economic recovery’.
In these times of crisis, “never had people needed politics and democracy as much as they did now,” said PS party leader, António José Seguro, who stressed that at the same time people had never felt them “so divorced” from their lives.
But was it possible, in the situation in which Portugal and Europe was currently going through, to talk about economic growth and employment?
Yes, it was possible. The policy agendas of the EU and G20 had been “wrong” because they did not put employment or economic growth on the top of their list of priorities.
“I don’t know one country or region in the world that has solved its problems without creating wealth, a dynamic economy and protecting and creating new jobs,” he said.
In a study carried out by the International Monetary Fund and analyses by the then G7 and EU, between 1991 and 2007, there had not been one country that had managed to resolve its problems and its public accounts imbalances without economic growth.
Economic growth was not just a question of an ideological option, it was a necessity as shown by the IMF study.
“In my opinion, Portugal has one main problem from the various problems it is currently facing – weak economic growth.
“We know the reasons: poor productivity, lack of competitiveness … And we know, too, the causes of these problems. In the past decade, economic growth in Portugal has averaged around 0.5%,” he added.
Between April 25, 1974 and today, not one State Budget had been balanced and in surplus in terms of receipts and expenditure. Portugal always spent more than it earned in terms of wealth. In simple terms, Portugal had lived on credit.
“We came to the point, because of our situation and also because of the attacks of market speculation, where we had to sort out our problems,” António Seguro said.
The situation is so serious that even the IMF points to a growth rate from 2014 to 2016 of just 0.3% – not sufficient even to pay Portugal’s debt interest.
This was a problem which needed the help of Europe and the world to solve, yet the answers being used currently in Portugal were almost exclusively ones of austerity and cuts.
Wrong vision
If Plan A austerity wasn’t sufficient, the Government moved immediately on to Austerity Plan B and more austerity. And if that didn’t work, then it was on to Austerity Plan C.
“This is a wrong vision and one that I reject,” he said, because it was decisive that Portugal created the conditions for growth and austerity stifled growth. “This is the main difference between me and the current Prime Minister.
“I believe that the Prime Minister thinks that by sorting out the country’s budgetary imbalance, Portugal’s economy will then grow. I don’t share that conviction,” he added.
“I think we need to attack the problem from both sides: on the one hand by implementing some measures of austerity and on the other by stimulating the more productive sectors of society,” the leader of the opposition explained. But wholesale austerity for the sake of it would only kill prospects, close companies, destroy growth and increase unemployment.
But which sectors needed help? The export sectors; giving those companies that wanted to export, and need help to do so, funds and incentives – in short by helping small and medium enterprises producing transactional goods, and those who were willing to do so by changing their business models and structures.
This would increase national production and reduce the country’s needs to import goods from abroad.
How could the Government and international institutions help? A credit line from the European Investment Bank, worth at the very least €5 billion and by using European Funds set aside for Portugal as a guarantee on the loan. This would inject liquidity into our companies.
A short time ago, a group of Portuguese footwear firms were at a shoe fair in Milan. These companies succeeded in winning various orders to supply shoes for the coming season. They had the capacity, the know-how and the machinery. But they didn’t have the money to buy the raw materials.
“Should we, as a country in the position we are in, let these companies die because they don’t have access to the credit they need?
“That is why we should do everything we can to inject money into our companies, to help them survive, maintain jobs and enable them to grow economically,” he concluded.
