President calls new Council of State as Brussels says a billion euros should be cut from Portugal’s budget

With focus never far from Portugal’s financial situation, news today has returned to the Plan B that Brussels is ‘demanding’ – and which Portugal’s Socialist leaders are saying ‘doesn’t exist’.

Cutting through the verbiage, the fact that President of the Republic Marcelo Rebelo de Sousa has called yet another Council of State – this time for July – is extremely relevant.

At the new president’s first Council of State earlier this month, European Central Bank boss Mário Draghi “congratulated” the government on its decision to “prepare additional measures” of austerity.

His message was clear. Whether PS leaders liked to admit it or not, a Plan B was not only required, it was expected fast.

Then came news of a second Council of State to be convened on the request of President Marcelo, hotly proceded by a report on the latest post-troika evaluation by the European Commission.

Bit by bit, the pressure on PS leaders to rethink their anti-austerity plans is being amplified.

Monday’s headline in tabloid Correio da Manhã refers not just to the cut of €1 billion, but to Brussels saying ‘no’ to the increase in national minimum wage, and to a return to the 35-hour working week.

The CM story explains Brussels wants a 0.6% haircut on the country’s spending projections – not the 0.1-0.2% the executive has said it ‘might’ be prepared to concede.

And the story gets worse: minimum wage increases from 505 euros to 600 by 2019 “are not in line with the macroeconomic perspective”; the 35-hour working week is a “concern” and pension plans should be “altered”.

The tortuous banking situation – not least the intrigues playing out with BPI and outgoing major shareholder Isabel dos Santos – is adding to the mounting pressure, with left-wing parties propping up Portugal’s PS government in no mood for any concessions.

For now, the next ‘crux moment’ seems to be April 21 when CM says the Council of Ministers will discuss the Stability Programme.

It is then that any Plan B is likely to be introduced – and it is then that the fireworks with PCP communists and Bloco de Esquerda allies could truly begin.

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