Portugal was set to unveil a brutal austerity budget today despite its worst recession since the 1970s as the eurozone struggler strives to avoid a second bailout.
Lisbon — which took a €78 billion (£63 billion) bailout in April last year — will hit its beleaguered population with a blizzard of income tax hikes, as well as pension cuts and property taxes.
Finance minister Vitor Gaspar backed down on plans to hike social security contributions in September after mass protests.
Unemployment in Portugal is above 15% and the economy is expected to shrink at least 3% this year. The government expects a contraction of just 1% in 2013, although most experts brand this as wildly optimistic.
Capital Economics economist Jennifer McKeown said: “They’re certainly going to need some more money at some point, although they’ve made some progress on buying themselves more time.”
