Portugal’s political impasse puts off investors

Whatever form the Portuguese government takes this week, the political “impasse” since this month’s legislative elections point to a “weak government that will have a hard job implementing difficult measures”, a leading investment banker has told Bloomberg. Owen Callan, of Cantor Fitzgerald said: “There are no certainties over which of the scenarios will come about, and markets hate this, as it means the Portuguese will continue to underachieve”.

Callan raised the concern that new elections could follow as any scenario emerging from current options looks fraught with uncertainties.

His views have been endorsed by consultancy boss António Barroso of Teneo Intelligence, who predicts that it is “unlikely that the government will last more than a year, as Passos Coelho will be at the mercy of the Socialists every time he tries to get a law through parliament”.

Federico Santi, of Euroasia, told the financial site that the “risks for budgetary consolidation will increase as the government (of Passos Coelho) will be under pressure from the PS to soften the rhythm of adjustment”.

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