Sunday, June 05, 2011

Portugal Election Results June 5, 2011

The leftist Socialist Party has been ejected as the leader of the Portuguese government. This comes after the country was forced to accept a massive bailout following poor spending patterns. Portugal is not nearly out of the woods but appears to be in a better position with the center-right Social Democrats entering office.

The Social Democratic Party elected 105 lawmakers in the 230-seat Parliament compared with 73 for the second-placed Socialists. The Social Democrat share represented about 39 percent of the vote. The center-left Socialists' share was 28 percent.

Social Democrat leader Pedro Passos Coelho, who will likely become prime minister, said his government "will do everything in its power to overcome the great difficulties we face and also provide assurances that (Portugal) won't be a financial burden" on Europe.

Another conservative party won over 20 seats, giving the conservative factions a majority in Parliament.

However, the task is not going to be easy:

The new government inherits a record jobless rate of 12.6 percent and an anticipated economic contraction of 4 percent over the next two years. Necessary welfare and pay cuts, tax hikes and promises from trade unions not to strike will also present tough challenges.

Given its continuing difficulties, Portugal still hasn't escaped the possibility of a financial catastrophe.

The new government must move quickly to enact more than 200 measures over the next two years, cutting expenditure and reforming social and economic sectors in accordance with the bailout terms. At the same time, it has to find a way to engineer the fresh growth that will allow it to free itself from debt in the long term.

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