GeniB

[QUOTE=Red Eric;11786151]T

Why would S&P downgrade Portugal? Portugal isn't holding a referendum,

That fact means nothing to the rateing agencies..Its confidence that matters. In the USA they do not have confidence in any Government that contains Communists. As I have said before the US Government controls both Moody's and S&P. These agencies control the financial 'health' of countries around the world. Their influence is huge ,and it will certainly affect Portugal's ability to obtain credit
Which for anyone in business is all they care about.

Pulaski

Maybe it's something to do with communists being hopeless at managing a country/ economy and consequently not being very good at paying their debts. Maybe.

nogard

GeniB

I think you might have something there Pul

Red Eric

Ah well, that's ok then. We'll just give the US ratings agencies a voting slip and a pen in future and forget about holding elections in Portugal altogether. The ratings agencies, after all, are proven to be extremely accurate and reliable in the matter of assessing the financial wellbeing of banks, companies and countries, aren't they?

Red Eric

It does depend to a certain extent what you mean by "the average Portuguese". I'll concede you a small point here in that there will probably be no immediate and dramatic change in the personal circumstances of, say, a childless couple in work on modest salaries - not one they would point to and say "I'm a lot better off under this new government" about, anyway. But then the Portuguese are a somewhat melancholy bunch who always think yesterday was better than today and the future doesn't look too bright. Ask them how they are, as a polite greeting, and the best you get is "getting by".

However, I'll give it a go trying to answer your questions in a very brief summary of some possible measures, even though negotiations between the parties aren't finished, so it's impossible to know exactly what's on the table.

One of the cornerstones of the PS campaign was the relaunching of the economy by increasing peoples' spending power, ie giving them more disposable income. To this end I expect to see a defined timetable for the increase of the minimum wage with amounts and dates, the elimination of the 3% surtax on IRS within a defined period, the reintroduction of additional scales on IRS, and the unfreezing of pensions with a commitment to no more cuts. For public servants and ex public servants, the unfreezing of pay and the reversal of previous cuts in both pay and pensions. For people with children, a return of family benefit. Possibly a reduction of IVA on electricity / gas / heating fuel.

Less immediately obvious in terms of money in the pocket, a start on tackling precarious employment eg action on false green receipts (where people to all intents and purposes are employees but are treated as self-employed) and on abuse of short term contracts. Protection and reinforcement of the principle of collective agreements and bargaining. A return of the 35 hour week regime and of at least 2 of the public holidays removed in 2011.

More generally, in terms of social policies, additional spending on health, education and welfare. For health, the provision of a family doctor for all will remain a goal and a probability of reductions and/or eliminations in charges paid at point of delivery (taxas moderadoras). For education, more provision of pre-school places, alterations to assist in the acquiring of text books for primary and secondary schooling, alteration to education curriculum policy, reduction in class sizes, alterations to higher education tuition fees and/or payment arrangements.

What I do not expect is a continuation of the attacks on wages and conditions for workers, on pensions currently in payment, on public sector jobs and services and the programme of ideologically-driven privatisations which has not and will not yield any tangible benefit for the country. So we can keep water supplies, rail transport and the one state-owned bank (amongst a dwindling number of other things) in public hands for the time being, and be secure in the knowledge that our money (or no more of it than already is) won't be going to private interests in the provision of universal education and health.

EMR

All very ideaistic, but a very easy question to answer ,where is the money coming from to pay for these proposals.
What cuts in expenditure which will have to run into billions are planned to pay for these proposals
Does the coalition plan to borrow more and uf so what will the Troika have to say about that?
It is a typical idealistic socialist program ignoring how the real world of finance works.
Such ideals have not worked in any other country so why do you think they will work in Portugal.

Red Eric

It's not a particularly easy question to answer in a short post and I'm not going to write another essay, especially as the details aren't yet known. However, the overall fiscal impact on government finance is neutral. The PS previously published its workings-out, which were the result of extensive studies by a team of specialist economists and which you can find online if you're interested.

The coalition is probably gone. It won't be replaced with another - do keep up.

The "real world of finance" is something wholeheartedly embraced by the Portuguese Socialists. I can't think of another country besides Portugal, in Portugal's current circumstances, where such a programme has been tried, let alone one where it has been tried and shown to have failed. Can you?

However, that aside, it's nice to see that you regard the measures as ideal.

EMR

What do you mean the coalition is gone, the socialists need the support of those further to the left who have their own agenda and can vote agajnst any policies they disaprove us in concert with the conservatives albeit for different reasons.
As for a neutral budget , no such thing exists , cuts in expenditure have to come long before increases in min wage, pensions, tax etc otherwise how are they to be financed.?
I did not say ideal but idealistic.
Socialists embracing the real world of finance is a totally new concept in anyones mind.

Red Eric

I mean the coalition (PSD - CDS/PP) will most likely have their programme voted against next week ie will be gone.

IF Cavaco Silva then appoints Costa as PM, it will be as a minority Socialist government with the necessary support in parliament from the other left parties to get a programme and a budget approved, not a coalition as such. There is a difference. For example, if the ratings agencies wet themselves every time a government includes a communist, they can stay dry on this occasion.

I mean what I say about the measures I mentioned having a neutral effect - ie those that will cost money will have a counterbalance elsewhere so the overall effect is a budget deficit within the agreed limits etc An increase to the minimum wage, by the way, is not a cost to the government.

I didn't say socialists - I said the Portuguese Socialists (ie that party which you have been insisting isn't at all different to the PSD).

Pulaski

Er, yes it is. It reduces corporate profits and hence corporate taxes and reduces the income of business owners and investors, and hence taxes on relatively wealthy individuals. The loss in taxable income is transferred to those on on low income who pay little or no tax.

There is also a good chance it will reduce the number of jobs, thereby increasing the money spent on unemployment pay and other social costs for the unemployed and their families.

macliam

This is a consistent claim against any form of wage guarantee - but is not proven. In general, businesses factor in the increased cost and the world moves on. What DOES mitigate against growth is when there is negligible advantage for the low paid to work rather than claim benefits, and a drain of able resource, as in Portugal.

Ingles

Portugal Min Wage 505.00€'s per month = 3.15 €'s per hour = +/- £2.16.
It is stated that +/- 40% off the PT Work Force are on Min Wage

EMR

The min wage works in the UK in part because of the benefits system which tops up incomes combined with the growth in the economy and raising income levels before tax is due.
Low as the min wage in PT is what is also needed more is to ensure that employers actually do pay the wages that are due and that short term contracts are ended.
Every year a well known english food shop in the Algarve turnsover its staff as their 6 month contracts come to end
If you force a business already making little money to pay a higher min wage it has two options, raise its prices or employ fewer staff.
There is no easy or short term route to improving the livjng standards of those at the bottom as the new if it happens government will soon find out.

Ingles

Shows how much you really do know about real life PT