Hugo Coelho provides a Portuguese perspective on the upcoming MFF negotiations.

The Portuguese conservative prime minister has been pushing the greatest tax increase in living memory through Parliament, but today he is heading to Brussels to make a case against austerity.

The old saying ‘do as say, not as I do’ seems to be the right tag for Lisbon’s diplomatic stance ahead of the EU summit intended to reach a deal on the Union’s next 1 trillion seven year budget. Portugal’s line of reasoning is the same as the European Orientation Committee of Notre Dame. Austerity for the States, growth for Europe must be two sides of the same coin.

The tight grip on the national budget imposed under the bailout programme has left the right wing coalition government with no other means to promote economic growth and slow down unemployment but European funds. As signs of a deepening economic slump increase, securing a deal in Brussels has become vital. If the country is to have a reasonable chance of returning to bond markets in the near future, it is better to be a positive one.

Portugal first stood behind the European Commission proposal on the Multiannual Financial Framework and openly opposed claims by the so-called better spending group to reduce it. A few weeks ago, as this proved to be losing battle, it shifted focus to fund distribution.

Cohesion policy is Portugal’s number one priority. Structural funds and the cohesion fund combined account for more than two thirds of the envelope it gets from Brussels (agriculture accounts for another 25%). Co-financing rate – now at 85% – is the other issue on top of the Portuguese agenda. It is pointless to secure a good financial envelope without it for the country wouldn’t be able to pay for its share in projects, officials argue.

EU budget talks and recent discussions on the banking union have pushed the Portuguese prime minister to the forefront of the European stage as never before. Germany’s favourite has even been talking against Berlin hard line. Last week, one day after meeting Angela Merkel in Lisbon and asking her to be “ambitious”, Passos Coelho travelled to Brussels to meet his polish counterpart and coordinate a show of force with poorer European countries.

Socialists, the main opposition party, say ‘at last’, proving that Europe still is a cross-party issue in Portugal. But they also warn that the EU budget is far from enough. At the end of a meeting with troika representatives last week in Lisbon, António José Seguro, the socialist leader, was blunt about it. “There is a consensus in Portuguese society that the austerity recipe has failed.”


Hugo Coelho is a Portuguese author and journalist who has recently moved to London.