Government Predicts 2026 Budget Surplus Amidst Political Tensions
The government has expressed confidence in the economic outlook for 2026, predicting a 2.3% growth and a budget surplus of 0.1%. However, the budget's passage is not without controversy, with José Luís Carneiro, a prominent member of the Portuguese Socialist Party (PS), threatening to change his vote if it crosses certain 'red lines'.
Parliament is set to begin debating the 2026 State Budget on Monday, with the government already securing approval in principle. Despite this, there is little fiscal room for new measures, including a structural increase in pensions. The government stands alone in its belief of a surplus, with the Budgetary Technical Support Unit, IMF, Bank of Portugal, and Public Finance Council anticipating a deficit. The budget is expected to pass its first reading on Tuesday, thanks to abstentions from the PS. However, Carneiro has warned that the PS may change its vote on November 27 during the final approval if the government includes proposals that cross a red line.
The budget does not include any pension increases, only the standard annual adjustment, which is likely to be below 3% in 2026. Parties have until November 7 to submit amendment proposals for the budget.
The 2026 State Budget is expected to pass its first reading with the support of the PS, but its final approval on November 27 remains uncertain. The government's forecast of a surplus is at odds with several independent bodies, and the threat of a change in vote from the PS highlights the political sensitivities surrounding the budget.
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