Portugal’s new government faces EU hurdle over 2016 budget

The European Commission could ask the new Portuguese government in the spring of 2016 to tweak its draft budget for 2016 and implement bigger structural deficit cuts. Such a request could put Portuguese Prime Minister António Costa on a collision course with either the Commission in Brussels, or his leftist allies in Lisbon.

In a letter sent by the European Commission to Portugal on the 27 January 2016 the Commission highlighted risks of 'particularly serious non-compliance' with eurozone deficit-reduction obligations. Rating agencies also threatened downgrades.

ESO: Background information: Portugal's new government in a generous mood http://www.europeansources.info/record/portugals-new-government-in-a-generous-mood/

ESO: Background information: Socialist Costa to head Portuguese government with uneasy far-left backing http://www.europeansources.info/record/socialist-costa-to-head-portuguese-government-with-uneasy-far-left-backing/

Politico, 28.01.16: Portugal’s Costa cruises into budget battle http://www.politico.eu/article/portugals-costa-cruises-into-2016-budget-battle-government-european-commission/

The Portugal News, 21.01.16: Budget to be presented early next month http://www.theportugalnews.com/news/budget-to-be-presented-early-next-month/37225

European Commission: DG Economic and Financial Times: Financial assistance in EU Member States: Portugal http://ec.europa.eu/economy_finance/assistance_eu_ms/portugal/index_en.htm

EurActiv, 04.02.16: Portugal bows to EU pressure to lower budget deficit http://www.euractiv.com/sections/euro-finance/portugal-bows-eu-pressure-lower-budget-deficit-321575

Euro|Topics: Debates, 04.02.16: EU commission not happy with Portugal's budget http://www.eurotopics.net/en/153151/eu-commission-not-happy-with-portugal-s-budget

Portugal: Draft Budgetary Plan 2016 http://ec.europa.eu/economy_finance/economic_governance/sgp/pdf/dbp/2016/2016-01-22_pt_dbp_en.pdf

---