Portugal:
a European path out of austerity?
The economy has rebounded since the centre-left government
reversed post-crisis budget cuts
Peter Wise and Ben Hall in Lisbon APRIL 10, 2019
Europe is still struggling to find a label for the new brand
of socialism that has lifted Portugal’s fortunes over the past three and a half
years. In the Portuguese media, the term geringonça, meaning “an odd
contraption”, has stuck. Peter Mandelson, the British Labour peer, has
suggested “the fourth way”. António Costa, the prime minister who gained office
by forging a surprising partnership between the moderate and hard left, simply
calls it “turning the page on austerity”.
One of the few successful centre-left politicians in Europe,
Mr Costa is on course for re-election this year, having presided over
an economic turnround that has restored confidence to Portugal, a
country that the European debt crisis brought to its knees. Unemployment has
halved to 6.7 per cent and the budget deficit could be eliminated this year for
the first time in over 40 years.
Across the continent governing centre-left parties have been
crushed by austerity policies. France and Italy were unable to kickstart their
weak economies as they stuck to the EU’s tough public deficit limits.
Greece’s far-left Syriza government won power by railing against
the detailed austerity measures required under its bailouts fromthe
EU and IMF — only to implement many of them once in office.
Portugal’s centre-left government took a different course.
It initially clashed with Brussels by reversing public spending cuts and
allowing the deficit to swell well above agreed objectives, before ultimately
proving to EU officials that by putting more money in people’s pockets it could
lift growth, and make it easier to meet budget targets.
“People were highly sceptical about our economic policies,”
Mr Costa tells the Financial Times. “But we have shown that it is possible to
raise incomes, lift private investment, cut unemployment and still have sound
public finances.”
As he heads towards an October general election with a
double-digit poll lead, some European politicians now see Mr Costa as something
of a model for Europe’s beleaguered social democrats.
“Public spending has
stayed under control, unit labour costs have been reduced, hence they have been
able to attract more foreign direct investment and increase their exports,”
says Ivan Scalfarotto, a former Italian trade minister and centre-left MP.
“Costa, also, is a good communicator: he stressed the idea that ‘sacrifice was
over’ and has been effective at keeping his leftwing coalition together.”
Portugal will also be an important voice in a highly charged
debate about overhauling the eurozone’s fiscal rules. Most eurozone members
believe the rules have become too complex and critics see them as either too
rigid or weak. Mr Costa believes he has shown there is another way.
In Brussels, Mário Centeno, Mr Costa’s finance minister,
stands at the centre of EU economic policymaking as president of the eurogroup
of finance ministers. His election to the role, seen as recognition of his
fiscal success, came after Wolfgang Schäuble, then German finance minister,
described him as the “Cristiano Ronaldo” of his EU peers, after the Portuguese
football star.
For many on the European left, Mr Costa is the prime
minister who showed that the financial crisis could be tackled without
destroying jobs and living standards. As he himself puts it: “It’s no longer a
matter of political discussion, it’s a matter of fact”.
For others, Mr Costa has merely had the good fortune of
being lifted on the tide of a global recovery, falling oil prices, a
tourism boom and a sharp fall in the cost of servicing one of Europe’s
heaviest debt burdens — a turnround, they say, that would have been impossible
without the European Central Bank’s government bond-buying.
“While Costa’s political acumen cannot be denied, it should
not be forgotten that his government has faced very favourable macroeconomic
conditions over the past three years,” says Antonio Barroso, deputy director of
research at Teneo Intelligence.
Portugal's debt crisis has stabilised following years of
economic pain and anti-austerity protests © AFP
Daniel Traça, dean of Lisbon’s Nova School of Business and
Economics, whose gleaming new campus is itself testament to Portugal’s
recovery, believes Mr Costa’s main accomplishment lies in ensuring that the
recovery has benefited the most vulnerable people. This, he says, has convinced
the country that “sound public accounts are compatible with social cohesion”.
For his political opponents, however, Mr Costa’s claim to
have overturned austerity is mere rhetoric for what is, at best, “austerity
lite”. They charge him with fiscal sleight of hand, offsetting income tax cuts
with higher indirect taxes and balancing the books by restraining public
investment. Pedro Passos Coelho, the former centre-right prime minister,
recently accused the PS government of cutting health and education spending
even more than he did during the bailout.
“Things have improved, but life was much better before the
crisis than it is today,” says Filipa Bivar, an insurance worker. “The PS is
managing the economy well, but has benefited enormously from the difficult
decisions made by the previous government.” She fears popular measures could
lead to “big problems down the road”.
In the public sector, workers are pressing Mr
Costa to go much further in overturning austerity. Hundred of thousands of
state workers, from nurses and teachers to police inspectors and prison guards,
have been staging strikes and protests to recover earnings lost during the
crisis. “It’s normal that after a period of great pressure everybody wants
everything right now,” says Mr Costa. “A good government has to manage social
needs [in keeping] with its fiscal capacity and political priorities.”
Although not as traumatic as the experience of Greece,
Portugal’s rescue was bruising. In an effort to control ballooning debt,
stabilise precarious banks and introduce growth-friendly reforms, Lisbon
negotiated a 2011-2014 austerity programme with the Euorpean Commission, IMF
and the ECB — the so-called troika — in return for a €78bn bailout.
Years of economic pain followed. The then centre-right
government under Mr Passos Coelho made drastic cuts to health, education and
welfare spending, along with state pensions and bank holidays. Taxes were
increased. In the public sector, working hours were extended while the minimum
wage, salaries, recruitment and career progressions were frozen.
Under the troika’s “fiscal consolidation strategy”,
Portugal’s budget deficit fell from 11.2 per cent of gross domestic product in
2011 to 4.5 per cent per cent in 2014, excluding one-offs. The current account
moved into surplus as domestic demand collapsed and companies were forced to
export. Public debt, however, continued to increase, reaching 130.6 per cent
GDP, an all-time high, in 2014.
Tens of thousands of businesses went to the
wall in the country’s worst recession in almost 40 years. The welfare net
was stretched to breaking point as unemployment soared above 17 per cent,
leaving more than 40 per cent of under-25s out of work. Hundreds of thousands
of mainly young, skilled workers, emigrated — a loss of more than 4 per cent of
the working age population between 2008 and 2016.
Mr Costa, who was Lisbon’s mayor during the crisis years,
accused the Passos Coelho government of using the bailout as “cover” for a
neoliberal agenda of rolling back state services, cutting labour costs and
privatising public assets. The bailout had impoverished the nation, he railed
in 2015, “creating jobs for nurses, but in the UK, not Portugal”.
Once in office, he set about turning back the clock. “The
troika cut public sector wages and state pensions by 30 per cent, we gave that
30 per cent back,” he says. He also reversed austerity measures affecting
working hours, holidays and taxes, at the same time lifting the minimum wage by
20 per cent over two years.
Brussels was deeply sceptical and came close to fining
Portugal for allowing the deficit to hit 4.4 per cent rather than the agreed
2.7 per cent. But in May 2016, the Commission granted it a reprieve in the form
of an extra year to comply. Since then Portugal has consistently beat its
deficit targets; the deficit of 0.5 per cent of GDP recorded for 2018 being the
country’s smallest shortfall since democracy was restored 45 years ago.
As Portugal heads towards a zero deficit this year, Italy is
struggling to keep its deficit under 2 per cent of GDP — far higher than the
EU-mandated target of 0.8 per cent — and that only after Rome’s populist
coalition agreed to delay expansionary measures. While Matteo Salvini, Italy’s
deputy prime minister, lashes out against EU-driven austerity, Mr Centeno urges
restraint, saying earlier this year that “there is no room for easy or populist
solutions”.
Compared with Greece, Portugal — even under Mr Costa’s
anti-austerity government — has adopted a far more conciliatory approach to
Brussels. Despite pressure from the leftwing parties supporting the PS
government, it has never proposed any write-off of public debt, arguing instead
for better terms as part of a wider EU agreement. Public debt is on a downward
path — Mr Costa is targeting a reduction to 118 per cent of GDP this year. On
his watch, the three big rating agencies have also lifted Portugal above junk
status.
However, Mr Costa faces attacks from both rightwing
opponents and leftwing supporters. Assunção Cristas, leader of the conservative
Popular Party, lambasts Mr Costa for delivering “the highest tax burden ever”.
Catarina Martins, national co-ordinator of the Left Bloc, which supports the
government, says the PS could have invested €4bn more in public services since
2015 and still have complied with the EU rules.
Portuguese Prime Minister António Costa claims the country
has 'turned the page on austerity'
The prime minister rejects the criticisms, citing
improvements in the national health service, including the recruitment of 9,000
more employees since 2015. He has also announced a 10-year national investment
programme designed to pump €20bn into transport, energy and environmental
projects.
Ms Martins says the government has “stopped the destruction”
of public services “but has not proved capable of making them strong again”.
But even the “baby steps” are an achievement.
“The little changes we made have brought about a big change
in people’s lives,” she says, helping to revive the domestic economy.
Mr Centeno himself admits that the degree to which the PS
has overturned austerity is “not dramatic”. Economic growth in late 2015 was
“very poor” and “decelerating”, he says. “A change had to be implemented, [but]
not a big change. I am very suspicious of visionaries who think they know
enough to deal with big machines. I fear big machines.” He attributes the
faster-than-planned reduction of the deficit to a sharp fall in the interest
Portugal pays on its debt.
Small policy changes were enough to restore confidence and
lift growth, he says. “The trick was to commit to a path and stick to it.” The
consequence, he says, was a “tremendous jump in confidence and economic
activity” beginning in the second half of 2016.
The combination of fiscal discipline and a fair distribution
of the economic benefits is what Mr Traça of Nova SBE sees as Mr Costa’s
lasting legacy. “Any [Portuguese] government that cannot deliver this in the
future will not be in power for long,” he says.
But he criticises what he describes as the government’s
inertia on reforms to make the public administration more efficient and
effective. “We have heard nothing about plans for where Portugal should be in
10 years.”
Mr Costa believes everyone, including the European
Commission, which oversees the fiscal rules, has learnt important lessons from
the debt crisis. “I think we now have a stronger consensus, not only on
respecting common rules on deficits and public debt, but on the importance of
economic growth to reduce unemployment and on increasing people’s incomes to
strengthen confidence. Confidence is the great driver of economic recovery.”
The costs of the crisis are still being felt
Portugal’s Socialist government was quickly made aware of
the fragility of the country’s banking sector. Weeks after taking office in
November 2015, it agreed a €2.3bn state rescue for Banco Internacional do
Funchal (Banif).
Given that Banif was only the country’s seventh largest
lender, this was “probably the most expensive banking bailout in Europe”, says
Mário Centeno, the finance minister. In 2016, the government paid a further
€3.9bn into state-owned Caixa Geral de Depósitos, the country’s largest bank,
as part of a €5bn recapitalisation plan.
“There was an absolute bottleneck,” says Mr Centeno, who
says three-quarters of banking assets were held in lenders that were “in
disarray”. He adds, “You can’t have economic growth in a country that does not
have a stable financial sector”.
In a sharp reminder of the continuing costs of the banking
crisis, Novo Banco, the so-called “good bank” rescued from the 2014
collapse of Banco Espírito Santo, posted a net loss of €1.4bn for 2018 on top
of a €2.3bn loss the previous year. This has forced Mr Centeno to set aside
€1.1bn this year to prop it up, instead of a budgeted €400m.
The government supports Novo Banco, acquired in 2017 by Lone
Star, the US equity fund, by making state loans to the country’s bank
resolution fund, which is owned by all Portugal’s banks. These loans will not
cost the taxpayer a cent, Mr Centeno promises, nor will the additional support
required to prevent the budget deficit from falling to “close to zero” this
year.
Critics on the both the left and right, however, say
taxpayers will be hit indirectly by the contributions that state-owned CGD has
to make towards shoring up Novo Banco.
ANÁLISE
A “quarta via” e a recomposição do centro-esquerda
Em quase toda a Europa, o regresso dos partidos de
centro-esquerda a uma agenda social é hoje mais do que evidente.
Teresa de Sousa
14 de Abril de 2019, 6:13
1. No dia 10 de Abril, o Financial Times dedicava um longo
artigo aos três anos e meio de governo de António Costa em Portugal. A questão
central era saber até que ponto o Governo acabou com a austeridade, provando
que uma política de relançamento económico por via do consumo pode dar
resultados, permitindo, ao mesmo tempo, cumprir as metas de Bruxelas. As
conclusões são mistas e o próprio Mário Centeno diz que a redução da
austeridade não foi dramática. Mas serviu, como reconhece o diário britânico,
para criar um clima de maior confiança, interna e externamente, o que é
fundamental para a economia.
O início do artigo do FT merece também alguma atenção. Os
autores (o correspondente do jornal em Lisboa e o seu editor para a Europa, Ben
Hall) vêem na forma como António Costa reorganizou a esquerda e dirigiu a
política económica e financeira do país um sinal de que, depois do longo
período em que a social-democracia europeia andou à deriva, poderia haver
finalmente alguma luz ao fundo túnel. Peter Mandelson, que fundou com Tony
Blair e Gordon Brown a “terceira via”, sugeria que se lhe passasse a chamar a
“quarta via”. Esteve recentemente no Porto uma dirigente britânica próxima de
Jeremy Corbyn para recolher argumentos que lhe permitissem convencer o líder do
Labour de que, na União Europeia, há margem para alternativas políticas. Corbyn
diz que não há, sendo essa uma das razões que apresenta para o seu
indisfarçável eurocepticismo. A bem dizer, talvez não haja para a versão do
socialismo que ele representa, saída do baú dos anos 80, mas há certamente para
aquela que os socialistas portugueses sempre defenderam desde a sua fundação –
moderada, europeia, liberal.
A “geringonça” é um modelo que não se aplica em muitos
países onde já não há ou nunca houve partidos comunistas fortes, mesmo que haja
versões do Bloco de Esquerda, mais ou menos radicais, que tentaram influenciar
de fora o rumo dos partidos de centro-esquerda com maior ou menor êxito, como é
o caso do Podemos (menor) ou do Syriza (maior). Mas há, em quase todos os
países europeus, um desafio à velha social-democracia que tem alguma coisa de
comum – o reconhecimento de que a “terceira via” não foi a resposta suficiente.
A crise financeira, com as suas consequências, ajudou a separar as águas,
trazendo à luz do dia uma realidade social à qual ninguém queria dar muita
atenção, mas também colocando à própria União Europeia desafios novos sobre os
consensos necessários para poder funcionar sem ter de impor um “pensamento
único”.
2. A questão é simples: se a social-democracia pode servir
para alguma coisa, terá de ser para o combate ao aumento incessante das
desigualdades, com a estagnação dos rendimentos das classes médias, com alguns
cortes na protecção social garantida pelo Estado, com o risco real de ver uma
nova geração que chegou ao mercado de trabalho na última década (e mesmo antes
disso) em boa parte condenada a empregos menos remunerados e mais precários. Um
recente relatório da OCDE demonstra isso mesmo. Os movimentos populistas e nacionalistas
europeus também se alimentam desta realidade, como se viu recentemente com os
gilets jaunes em França, em que os que foram deixados para trás se revoltam,
por vezes violentamente. Marine Le Pen tem uma surpreendente adesão entre a
juventude.
A “terceira via” foi a primeira resposta do centro-esquerda
à globalização dos mercados e à era da Internet. Partilhou de uma ilusão que
avassalou as democracias do Ocidente: que a globalização teria apenas efeitos
positivos, sobretudo nos países mais desenvolvidos. A ideia era simples: uma
nova distribuição do trabalho à escala mundial permitiria às empresas fabricar
os seus produtos em Marrocos ou na China, tirando partido de uma mão-de-obra
muito mais barata, reservando para si a parte da cadeia de valor que exigia
qualificações e tecnologia – o design, a concepção, a inovação, o marketing, os
serviços. As indústrias imigraram, criando bolsas de desemprego muito difíceis
de absorver. A expansão do sector dos serviços também deu lugar ao trabalho
precário e mal remunerado. A ideologia neoliberal, que acreditava na
racionalidade dos mercados para distribuir a produção e a riqueza à escala
planetária e nacional, bastando que a política e o Estado se afastassem do seu
caminho, permitiu ganhos de crescimento substanciais. O crédito fácil e barato
atenuou o aumento das desigualdades e da precariedade nas classes médias.
A “terceira via” aceitou esta realidade e acrescentou-lhe a
obrigação de dar a cada um as melhores condições para singrar neste novo mundo:
educação, especialização, formação ao longo da vida. Claro que havia diferenças
entre governos de centro-esquerda ou de centro-direita. No Reino Unido, Blair
instituiu o salário mínimo, criou programas para retirar as crianças da pobreza
ou os chamados “tax credits” para garantir aos “working poor” que valia a pena
trabalhar em vez de viver à conta de subsídios. Também revolucionou o apoio ao
desemprego, acrescentando-lhe uma obrigação de formação. Este modelo foi
seguido em muitos países europeus, da Alemanha a Portugal. Na altura teve
sucesso. Mas apenas mitigou o problema que a crise financeira de 2008 haveria
de escancarar à luz do dia: as desigualdades crescentes, a massa de excluídos
que não acompanharam as novas exigências da mão-de-obra. O sociólogo alemão
Wolfgang Merkel chama-lhes os cidadãos “comunitários” em contraste com os
“viajantes frequentes”, aqueles que se adaptaram com grande vantagem à
revolução tecnológica e à globalização dos mercados, beneficiando da nova
redistribuição da riqueza.
3. Em quase toda a Europa, o regresso dos partidos de
centro-esquerda a uma agenda social é hoje mais do que evidente. Como o FT
também refere, o Governo socialista português não acabou totalmente com a
austeridade, mas alterou os termos em que ela era distribuída. Basta o exemplo
dos sucessivos aumentos do Salário Mínimo Nacional para constatar essa
preocupação. Em cada aumento, os empresários anunciavam o encerramento de
milhares de empresas. Nada aconteceu. Pelo contrário, a boa teoria económica
diz que, em alguns momentos, o aumento do salário mínimo tem um efeito positivo
na economia, forçando as empresas a modernizar-se e criando um ciclo virtuoso.
A nova vaga de renovação do centro-esquerda passa pela
quebra de alguns tabus, entre os quais a ideia de que aumentar impostos é uma
impossibilidade num mundo em que a concorrência passou a ser global. Não é
necessariamente assim
Pedro Sánchez está a ganhar vantagem nas eleições de 28 de
Abril porque anunciou um programa de reformas sociais que poderia ter passado
ao lado dos espanhóis, como a direita esperava, graças ao ressurgimento do
nacionalismo espanholista contra o nacionalismo catalão. Com a acalmia da
questão catalã, o seu programa está a dar frutos eleitorais, enquanto a direita
se esgota. As guerras internas do Podemos reduziram o partido que queria
hegemonizar a esquerda a metade.
O primeiro-ministro sueco, Stefan Loefven, que ganhou à
justa as eleições do ano passado, apresentou-se com um programa de regresso à
agenda social, própria da velha social-democracia sueca, num dos países mais
igualitários da Europa, mas onde as desigualdades também não pararam de
aumentar. Na Finlândia, o centro-esquerda prepara-se para ganhar as eleições,
depois de 20 anos à míngua, anunciando o aumento dos impostos para sustentar um
generoso Estado Social. Nos Estados Unidos, estudos recentes demonstram que uma
das mais importantes reformas de Clinton, a “Federal Welfare Reform”, que
anunciava “o fim do welfare tal como o conhecemos”, teve um enorme sucesso nos
anos em que a economia crescia fortemente, mas não resolveu na raiz os
problemas dos que ficam para trás – acabando com a “cultura da pobreza” que
passa de geração em geração.
A nova vaga de renovação do centro-esquerda passa pela
quebra de alguns tabus, entre os quais a ideia de que aumentar impostos é uma
impossibilidade num mundo em que a concorrência passou a ser global. Não é necessariamente
assim, desde que não apliquemos sem critério o template neoliberal como se
fosse a verdade absoluta, e se resgatarmos a política da prisão dos manuais de
economia.
4. Falta o segundo problema: como transformar o
funcionamento da União Europeia, que obriga a uma permanente coligação entre
forças políticas no Conselho Europeu e no Parlamento Europeu, de maneira a que
a alternância tenha margem para funcionar nas suas democracias. Pode ser este o
caminho da “quarta via”: velhos e novos problemas a exigirem novas respostas.
Uma condição necessária para travar os nacionalismos.
