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The European Commission (EC) considers that the Portuguese budget is in line with the recommendations in spring, but reinforces the warnings about the impact of the increase in debt on the economic recovery.
Portugal remains in the group of twelve countries with macroeconomic imbalances that must be analyzed later, indicated in the scope of the Commission’s Alert Mechanism, a situation that has been occurring since February. This is one of the notes from Brussels in the field of the presentation, this Wednesday, November 18, of the second part of the “autumn package”, to promote the coordination of economic and budgetary policies. The opinion of Brussels on the budget plans of the eurozone countries, including Portugal, will also be known.
Regarding Portugal, the EC warns, in particular, of the high level of public debt, which “although it maintained a constant downward trend until reaching 117% of the gross domestic product (GDP) in 2019”, it shot up with measures to combat Crisis proven by the new coronavirus. The projection is that the national public debt will increase 18 percentage points in 2020. Brussels recalls that Portugal was caught by the pandemic crisis that already suffered from several vulnerabilities, namely high levels of debt due to weak economic growth.
In addition, it is noted that in Portugal, Belgium, France, Greece, Italy and Spain, “given the high value of public debt and the high medium-term sustainability challenges before the covid-19 pandemic, it is important to ensure that it helps [à economia] don’t compromise budget balance ”in the future.
For now, the European Commission indicates that in general the budget plan proposals are in line with the recommendations at the fiscal policy level, adopted by the July European Council. “Most of the measures contemplated support economic activity to face an environment of considerable uncertainty”, is one of the conclusions.
In the case of Austria, Belgium, Cyprus, Estonia, Finland, Germany, Greece, Ireland, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain, the policies are “mostly” temporary, says Brussels.
Regarding the alert mechanism, the other Member States that, like Portugal, are on the verge of having budget problems are Croatia, Cyprus, France, Germany, Greece, Ireland, Italy, the Netherlands, Romania, Spain and Sweden (the list is the same as in February).
