o caminho da Grécia

Defiant Portugal shatters the eurozone's political complacency

The delayed fuse on the eurozone's debt-deflation policies has finally detonated in a second country. Portugal has joined the revolt against austerity.

The rickety scaffolding of fiscal discipline and economic surveillance imposed on southern Europe by Germany is falling apart on its most vulnerable front.
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For Portugal it entails a primary budget surplus on such a scale that it cannot possibly be compatible with the economic agenda of the Left.

Mr Costa's own proposals - scarcely more moderate - put him on a collision course with the European Commission. He has vowed to "turn the page on austerity", reverse Troika cuts, roll back labour reform, review the privatisation of public transport and the water works, and launch a 55-point reflation package led by spending on health care and education. The upset in Portugal has caught Europe's elites off guard.

The eurozone is enjoying a cyclical rebound of sorts, driven by the happy trifecta of cheap energy, a cheap euro, and cheap credit. The ECB's quantitative easing has flushed the system with liquidity though Europe still has one foot in deflation.


Ambrose Evans-Pritchard