In Portugal, anti-austerity policies have boosted the economy, says report

The report says anti-austerity measures have increased employment and growth and cut down the deficit.

A new report has claimed that anti-austerity policies pursued by the left-wing government of Portugal have boosted the Portugese economy.

The report, authored by Red Pepper founder Hilary Wainwright, argues that increasing spending and cutting taxes created jobs, increased economic growth and reduced public debt.

In return for a bailout, the European Union imposed privatisations and cuts in salaries, social security and services on Portugal – through a centre-right Portugese government.

After elections in 2015, the centre-left Socialist Party formed a coalition with the Communist Party and another left-wing group called Bloco Esquerda.

These left-wing groups helped pressure the Socialist Party into an anti-austerity programme.

Recently privatised companies were re-nationalised, the minimum wage rose by 20%, four national holidays were re-established and pensions were unfrozen.

As well as spending increases, taxes were cut on consumption in restaurants and on wages – although taxes were increased on luxury real estate and large firms.

The economic effect of this, the report says, was the return of economic growth. This was 4.3% in 2016/2017 after falling 7.9% during the austerity measures.

Unemployment fell from 17.5% in 2013 to 7.4% now and the public deficit reduced from 3.1% of GDP in 2015 to virtually zero now.

A public deficit is when a country’s spending is more than its income – the UK’s deficit is 1.9% of GDP.

The report points out that this was all possible while remaining in the European Union – and while following the EU’s rule that budget deficits should not exceed 3%.

In his foreword to the report, Labour MP Clive Lewis said that the Portugese example had lessons for the UK. He said:

““Portuguese socialists were able to prove that austerity measures had been broadly economically damaging as well as ideologically driven. In doing so
the country proved both an inspiration to others and a test bed for a new relationship between individual nations and the institutions of the EU.”

“This is a significant intervention for those on the left who argue for a Brexit, or “Lexit”. Many of the rules that are seen as obstructive to the socialist vision, whether on public ownership, outsourcing or state aid, are either misunderstood, have been superseded or are flexible.”

“You do the EU no favours by ignoring its faults, but it is not a fixed entity, and what look to be its long‑term strategic goals are subject, always, to the will of its members. It can only realise the ambitions of its founders, of peace, reconciliation, solidarity and broadly distributed prosperity, if its component nations are fighting for those ends.”

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22 Responses to “In Portugal, anti-austerity policies have boosted the economy, says report”

  1. Tom Sacold

    No mention of the EU enforced reduction in workers rights as part of the EU’s “stabilisation policy” !!!

  2. Dave Roberts

    I was interested in this article until I got to where it was from and who had written it. Hilary Wainwright of Red Pepper. La la land.

  3. Graeme Kemp

    Where/how can we read this report?

  4. Dave Roberts is the site but there is no sign of the report. I’ll do some more trawling and see what I can find.

  5. Dave Roberts

    Can’t find anything I’m afraid, maybe the writer of this article can post a link. I’m always sceptical of these think tanks of these think tanks and institutes as they peddle their wish lists based on anything except reality. A prime example is ” The New East End” by Kate Gavron and Geoff Dench of The Young Foundation which is largely fiction. I was born and bred in the East End and can’t recognise the area and the processes they describe so take all of these “reports” with a pinch of salt.

  6. Trevor Morton

    I’ve visited both public and private sector organizations in Portugal on business. Compared to the UK, the people there are so damned happy and enthusiastic and have such a positive attitude. And its not all to do with the weather and wine.

  7. Patrick Newman

    Dave, you dont need a think tank to tell you that public spending in a recession is not only a way to end the recession but by stimulating the economy the deficit will soon reduce. You just need a basic understanding of the writings of JM Keynes.

  8. Dave Roberts

    Hello Patrick! I wondered where you had got to. If I ran my business according to Keynes I’d be bankrupt because I can’t print money. Governments can, for a while, then it’s payback time! At the moment the UK economy is expanding, unemployment is at an all time, or nearly, low and I am witnessing shortages of all manner of skilled workers in construction. What not to like?

    Trevor Morton. Are you serious? Their all happy and smiling so quick, invest in Portugal!

  9. john hardman

    dave roberts ,the real world must allude you everyday,unemployment all time low yes,work poverty,low low wages,no future jobs ,zero hour contracts way to build an economy. no skilled workers due to tory closures of real apprenticeships and closing of nearly all industry .the uk has gone back to the thirties regarding future uk is what we have now,debt upon debt,over 2000 foodbanks,closures everyday ,the list is endless,as a person who spends a lot of time in portugal,their lifestyle is fantastic now,compared to here thanks to forward thinking economy expanding,in your head maybe,but not in reality poor boy.

  10. Dave Roberts

    John Hardman.
    Where is the report. I’d like to read that and not your fantasies. Nobody is disagreeing with the fact that we need real apprenticeships, what is needed is to allocate the blame as to what happened to them as I served on in the sixties as a bricklayer at Hackney College, went on to study surveying day release at the old North East London Poly and qualified MRICS. In those days it was possible because we had things called Technical Colleges and not the Colleges of Technology that they became first of all under Thatcher and then under Blair who accelerated the process. The whole process is set out in under The Campaign for Real Education so I won’t repeat it here except to say that the trendy left, having dismissed the working class years ago, seemed to think that a degree in Media Studies or flower arranging was going to solve the housing problem! So that’s that whinge of your dealt with.

    Now let’s deal with low wages and immigration because the two are linked as immigration is linked to the housing crisis. It’s true as my professional body the RICS, the Architects and all of the building employers have been saying for years that if you don’t train you won’t gain. One of the Chairs of a volume housing developer is on record as saying that when a politician said they were going to solve the housing crisis they were lying because there weren’t enough brickies summed it all up. For me it’s summed up when ads say things like ” Foreman bricklayer wanted, must speak Polish”. In fact the whole of Eastern Europe has been stripped of skilled crafts people. The downside is that they need to be housed, provided with medical facilities and their children educated because there is now the biggest Polish community outside Poland in the UK along with the Balts, Bulgarians and Romanians et al. And all because everything was going to be solved by the computer. Computers and media studies don’t build houses.
    As too low wages, well, what about a mass of Eastern Europeans without building skills who can work in the service industry and drive wages down because that is what has and is happening. It’s also responsible for zero hours working because with a continual injection of unskilled or wrongly skilled Eastern Europeans and others from around the world there is always a “reserve army of labour” to quote someone or other. Of course all of those people have to be housed which puts yet mores strain on what facilities there are.

    Food banks? A friend of mine volunteers at one in his church in Hackney to which I contribute fresh veg that I pick up from Spitalfields Market near the Olympic Stadium, another friend of mine runs one of the oldest firm there. According to my ecclesiastic friend between a half and two thirds of the food bank users are unemployed Eastern Europeans or undocumented migrants. I rest my case here as I have a business to run. Anything else I can help you with, do let me know.

  11. Patrick Newman

    Dave, I am sorry but I drifted off attempting to read your unique combination of xenophobia and economic illiteracy!

  12. Dave Roberts

    If you went to sleep you didn’t read it. Which bits are wrong/xenophobic/don’t understand/don’t agree with? You’re a great one for avoiding the detail but this time you seem to have gone to sleep. I really would like some constructive criticism such as which bits are what.

  13. Dave Roberts

    Patrick Newman. Are you having another Trotskyist Tantrum?

  14. Dave Roberts

    Jo Lo. Where is the report? I would like to read it.

  15. Dave Roberts

    To try ans settle matters a friend of mine has asked Red Pepper for the report as a search through their archive shows that it is three years since they did an article on that country.

  16. Dave Roberts

    So, we must assume that the writer of this article is a liar?

  17. Rula Law

    Not so tough to find. Stress on having a functioning constitution and PR – enabling small parties on the left to – remain / reform :

  18. Janet Marks

    Dave Roberts blames immigrants for the housing crisis which was begun under Thatcher (when the money from Right to Buy was refused to Local Authorities who wanted to build more social housing). Blair didn’t change this, just let RtB carry on. And then the Coalition govt brought in the Bedroom Tax and the housing benefit cap – Bingo! Housing crisis. Its clear that it has been building up for decades. Of course the increase in population has put pressure on this shortage, but to blame the shortage on immigrants is wrong.

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