Much of Portugal’s pain is being front-loaded, a strategy that won support from the Social Democrat opposition in May. It seems a bit late now for the same party to be crying foul

Portugal is entitled to feel a little aggrieved. It does not have an outsize debt problem or a bloated public service, like Greece. It does not have a housing or banking crisis, like Ireland. Yet it has suffered a severe bout of contagion from its euro-periphery chums. The yield on Portuguese 10-year bonds spiked to a fresh high of 6.5 per cent in late September amid talk the minority government might fail to get its 2011 austerity budget through parliament.
The budget looks comprehensive enough to get the deficit down from 7.3 per cent of gross domestic product this year to 4.6 per cent in 2011 (the target for 2012 is 3 per cent). Wage cuts for government workers and a rise in VAT are among the measures (helping to explain the strength of opposition). Much of Portugal’s pain is being front-loaded, a strategy that won support from the Social Democrat opposition in May. It seems a bit late now for the same party to be crying foul. The signs this week are that opposition may be waning; yields have fallen back a little. Still, the political fight is indicative of how difficult it is for European governments to achieve the promised fiscal adjustments that have allowed the eurozone crisis to abate.
Even if the budget passes, however, Portugal has work to do. Its real long-term challenge is not budgetary fixes but achieving sustainable economic growth after a weak 2011; the government forecasts negligible GDP growth while Barclays Capital predicts a 1.1 per cent decline. The country is held back by a rigid labour market, below-par education and high private sector indebtedness. Until those obstacles are addressed, the government’s ultimate goal – to rebalance its economy to focus on higher value exports – will remain out of reach.

Financial Times, 19 Out 10, tradução parcial [falta a frase que colocámos em título] aqui.