New EU voice sticks boot in over Portugal

Yet another voice of dissent is being plugged today in the growing clamour over Portugal’s economic direction.

Klaus Regling runs the EU’s bailout fund, better known as the Mechanism for European Stability.

It is no coincidence that his words are being publicised over national media this afternoon. They came on the day the PS government reduced IVA (VAT) in restaurants, returned to the 35-hour working week and increased the national minimum salary.

For a Brussels that wants further consolidation, these moves are seen as a “reversion of reforms” that “make the country less competitive”.

“We have to watch very closely to what is happening”, Regling told German weekly WirtschaftsWoche.

Regling was talking in the context of Brexit, and ‘what else might be worrying Brussels?’

Portugal, he told the paper, is the “the only country” causing EU concerns.

Considering that this was not the member state that blew a great big hole in the status quo this week, there could hardly have been more warnings from ‘the powers that be’ over the last few days that Portugal is under pressure.

On Wednesday, German finance minister Wolfgang Schauble let slip that Portugal could be in line for a second bailout . This was buzzed over the wire by websites Bloomberg and Reuters before he had time to qualify his statement with “unless it sticks to international commitments” (click here).

The IMF too has larded on the pressure, calling once again for more cuts in salaries and pensions in 2017 and 2018, and sounding warnings over unemployment and growth.

Any thoughts that Brexit might give the government some breathing space as Euro leaders are kept busy elsewhere seem well and truly unfounded.

But the sabre-rattling has not been lost on prime minister António Costa, who has twice fired broadsides at overseas critics, saying he has been “disappointed by Brussels” enough times not to think it won’t happen again, and more pointedly that the “Germans we know invest and trust in Portugal”.

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