Government: Economic activity news in Portugal

Municipalities affected by recent severe weather have requested that the government extend economic and employment support measures for an additional 60 days. A formal request has been sent to the Minister of Finance to keep these protections in place until the end of June.

The Council of Ministers approved a 600 million euro credit line, titled Portugal Energy Resilience, to assist companies struggling with rising energy costs linked to the conflict in the Middle East. The measure includes a one-year grace period and aims to provide immediate financial support to businesses facing supply chain pressures. This initiative is part of a broader government effort to mitigate the economic impact of international instability.

Minister of Infrastructure and Housing Miguel Pinto Luz confirmed that the government is ready to proceed with the privatization of the national airline, TAP, even if only one binding proposal is received. The government is currently awaiting a report from the public holding company Parpública regarding the non-binding offers submitted by Lufthansa and Air France-KLM.

The government has approved a temporary amendment to the Petroleum Products Tax (Imposto sobre Produtos Petrolíferos or ISP) regime. This measure aims to maintain fiscal relief on fuel prices, which have been rising due to the ongoing conflict in the Middle East.

Pedro Costa, a commentator for CNN Portugal, believes that the request from five European Union countries, which want a tax on the extraordinary profits of energy companies, “makes perfect sense.”

Fuel prices in mainland Portugal are expected to increase next week due to rising international oil costs. To mitigate the impact, the government will maintain temporary discounts on the tax on petroleum products (Imposto sobre os Produtos Petrolíferos or ISP) for road diesel and unleaded petrol.

Prime Minister Luís Montenegro has announced the 'Portugal Energy Resilience' (Portugal Resiliência Energética) support line, a €600 million initiative aimed at companies where energy costs exceed 20% of production expenses. Operationalised by the Portuguese Development Bank (Banco Português de Fomento), the scheme provides state-backed credit to help businesses manage cash flow and operational needs. The announcement coincided with the second anniversary of the current government's term.

President António José Seguro has enacted legislation ensuring 100% salary payment for workers under the simplified lay-off scheme (regime de lay-off simplificado). This support measure was created in response to recent storm damage, though it faced opposition from the PSD, IL, and CDS-PP during the parliamentary vote. The new rules aim to protect employee income during periods of temporary business suspension.

US Secretary of State Marco Rubio held a phone call with the Portuguese Minister of Foreign Affairs, Paulo Rangel, to discuss bilateral ties and transatlantic security. Marco Rubio thanked Portugal for its close cooperation in both economic and defense sectors. The conversation highlights the continued strength of diplomatic relations between the two nations.

Internal documents from the European Parliament suggest Portugal may see a 12% reduction in its national funding envelope for the 2028-2034 budget cycle. The cut results from a new EU architecture that merges the Common Agricultural Policy (Política Agrícola Comum) and cohesion funds into a single strategic plan. Residents should note that this reduction could impact long-term public investment in infrastructure and regional development.

Portugal achieved a budget surplus (excedente orçamental) of 0.7% of GDP in 2025, totaling over two billion euros. Finance Minister Joaquim Miranda Sarmento described the result as historic but warned of a more demanding economic environment in 2026. The surplus was driven by high employment and social security contributions, though critics point to significant cuts in planned public investment. Residents should note that while the national accounts are balanced, the government expects slower growth ahead.

The National Association of Fuel Retailers (Associação Nacional de Revendedores de Combustíveis) expects a slight drop in diesel and petrol prices starting Monday. However, the ongoing conflict in the Middle East has caused Brent oil prices to fluctuate, making final costs at the pump difficult to predict. Some analysts are calling for a reduction in the 23% VAT (IVA) on fuel to provide relief to households facing high living costs. Drivers should check local station prices early next week for potential savings.

Update: Government approves €150 million monthly fuel support package

The government approved a 10-cent-per-liter subsidy for exposed sectors including taxis, agriculture, firefighters, and freight transport. Prime Minister Luís Montenegro rejected calls for a VAT reduction on fuel or food, stating the country must maintain its status of financial stability. Those in the transport and agricultural sectors should note the support is estimated to cost €150 million per month.

Former President Aníbal Cavaco Silva has publicly supported the current government's reformist agenda while sharply criticizing the opposition. In a recent article, he described the party Chega as lacking credibility and warned that low economic growth could strengthen populist movements led by André Ventura. Cavaco Silva also criticized the Socialist Party for its role in the current political deadlock. Voters should note these comments reflect growing tensions between the country's traditional center-right and newer political forces.

The government announced it may adjust its response to rising prices if geopolitical tensions in the Middle East continue to impact the cost of living. As an immediate measure, the Ministry of Agriculture plans to reduce the price of agricultural diesel (gasóleo agrícola) by 10 cents per liter whenever price hikes exceed that amount. Residents should monitor upcoming Council of Ministers (Conselho de Ministros) decisions for further measures targeting food and energy costs.

Negotiations between the government, the General Workers' Union (União Geral de Trabalhadores or UGT), and employers' associations have ended without an agreement on a new labour package. Despite 52 meetings, parties remain divided on key issues, though some participants suggest there is still room for a deal. The reforms are intended to update employment laws and working conditions across the country. Workers should note that current labour regulations remain in place while discussions continue.

Update: UGT awaits final government proposal before April decision

The UGT is waiting for a final written proposal from the government before its leadership meets on April 9 to decide on the labour package. While the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses or CGTP) was excluded from the latest meeting, employers' associations have signaled support for long-term salary increases. Negotiators are aiming for a consensus on the Labour Code (Código do Trabalho) shortly after Easter.

Foreign Minister Paulo Rangel announced that the government is monitoring the Middle East conflict daily to determine if “structural measures” are needed to support families and businesses. While current mitigation packages address immediate inflation, more concrete intervention may be required to protect investment and growth if the war drags on. Residents should be aware that these measures could include energy tax reductions or the return of zero VAT (IVA Zero) on essential foods.

Drivers in Portugal will face a significant increase at the pumps this Monday, with diesel prices expected to rise by 12 cents per liter and petrol by seven cents. The Automobile Club of Portugal (Automóvel Clube de Portugal or ACP) has criticized the government's tax relief measures as insufficient to offset the global price surge. Travelers should note that the state continues to collect substantial revenue through the fuel tax (Imposto sobre os Produtos Petrolíferos or ISP) despite the current crisis.

Prime Minister Luís Montenegro announced that the European Commission has guaranteed Portugal will not lose Recovery and Resilience Plan (Plano de Recuperação e Resiliência or PRR) funds due to storm-related project delays. The Prime Minister argued for flexibility based on “force majeure” to ensure that infrastructure projects can still be completed without financial penalties. Residents should note that these funds are vital for national development and climate goals.

The Bank of Portugal (Banco de Portugal) has authorized a monthly gross pension of approximately €10,000 for its former governor, Mário Centeno. The 59-year-old former Finance Minister reached an agreement to retire after a career that included a decade at the central bank. While the bank maintains the specific terms of the agreement are confidential, the move has sparked public debate regarding retirement ages and public sector benefits.

The government and social partners reported progress in negotiations over a new labour package, though a final agreement has not yet been reached. The Business Confederation of Portugal (Confederação Empresarial de Portugal or CIP) and the General Workers' Union (União Geral de Trabalhadores or UGT) noted increased flexibility, while the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses or CGTP) protested after being excluded from the meeting. Employers are pushing for measures to increase productivity, while the government warns that “nothing is agreed until everything is agreed.” Workers and business owners should monitor these negotiations for changes to overtime pay and contract rules.

The Portuguese Communist Party (Partido Comunista Português or PCP) and the Left Bloc (Bloco de Esquerda or BE) are calling for government regulation and price fixing for fuel and food. Leaders Paulo Raimundo and José Manuel Pureza criticized the “obscene profits” of large companies during a protest in Lisbon, citing speculation linked to Middle East tensions. Consumers should note that these parties are also pushing for an extraordinary tax on large corporate profits.

Prime Minister Luís Montenegro has promised to use regulatory power to prevent fuel price speculation as costs at some stations again exceed two euros per liter. Energy Minister Maria da Graça Carvalho stated that while the market is tense, Portugal has not yet reached an 'energy emergency' that would trigger more drastic measures. Drivers should note that the government plans to release 10% of strategic oil reserves to help stabilize the market, though taxi federations are already requesting extraordinary support.

Former Vice-Prime Minister Paulo Portas addressed the Social Democratic Party (Partido Social Democrata or PSD) conference, calling for policy consistency in a “volatile and dangerous” world. Portas argued that increasing productivity (produtividade) is the only sustainable way to improve average wages in Portugal. Those living in Portugal should note that Prime Minister Luís Montenegro attended the session to hear the veteran politician's views on demographic decline.

José Luís Carneiro, secretary-general of the Socialist Party (Partido Socialista or PS), said the government should prepare a targeted plan to blunt the economic effects of the war in Iran, citing expected rises in fuel, food and housing-loan costs. Former economy minister António Costa Silva urged rapid action to identify energy‑intensive sectors and design specific support, warning that Portugal's growth and export performance are already weaker than expected. Businesses in transport, food distribution and energy-intensive manufacturing should follow any government announcements on sectoral relief measures.

The Institute for Employment and Professional Training (Instituto do Emprego e Formação Profissional or IEFP) approved 390 applications for an extraordinary fund to maintain jobs and support self‑employed workers hit by storm Kristin, allocating just over €11 million. The measure complements parliamentary emergency support for storm‑affected workers and aims to preserve payrolls in damaged businesses. Employers and affected workers should consult IEFP guidance on eligibility and payments.

The Ministry of Finance (Ministério das Finanças) has ordered central administration bodies to build larger spending reservations — up to 7.5% of tax‑funded expenditure — as it prepares the State Budget (Orçamento do Estado) for 2027. Officials say storm damage could force a budget adjustment if costs near €2 billion, though routine budget margins still provide some room. The move signals tighter public spending and possible delays or cuts to planned programmes; taxpayers and anyone expecting new public projects should watch finance ministry guidance.

The government pledged a temporary, extraordinary discount on the ISP — the Tax on Petroleum and Energy Products (Imposto sobre os Produtos Petrolíferos) — if pump prices jump by 10 cents or more compared with this week's level. Prime Minister Luís Montenegro made the commitment during a parliamentary debate; ministers framed the measure as a short-term cushion while critics warned it is politically driven and may be hard to sustain. Left and right parties reacted differently, with some accusing the government of undermining long-term fiscal logic. Motorists and drivers for businesses should watch pump prices and official announcements for the timing and scope of any tax cut.

A recent INE survey on contextual costs lists judiciary delays, administrative hurdles and regulatory uncertainty among the top barriers to business activity. The results have prompted interest from ministry study offices but firms say reform is needed to reduce delays and improve competitiveness. Companies that trade or invest in Portugal should track proposed changes to administrative procedures and plan for continued compliance costs in the short term.

Manuel Castro Almeida, the Minister of Economy and Territorial Cohesion, told visitors at the BTL travel fair that Portugal is not suffering from excess tourism or an unhealthy dependence on the sector, though he acknowledged occasional saturation in Lisbon and Porto. He said policy should focus on growing tourism value rather than simply increasing visitor numbers. Residents in the main city centres should still expect peak‑season crowding, and people working in hospitality or short‑term rentals may see the debate shape future rules.

The government approved changes to accelerate state payments, shortening deadlines and calculating late interest from the moment invoices are overdue, with automatic penalties for public entities that miss deadlines, the Minister of the Presidency said. The moves aim to make the State pay suppliers faster and reduce commercial credit risk for companies working with public bodies. Businesses and suppliers that deal with the State should review invoicing and contract procedures and monitor the final wording for when new deadlines and interest calculations take effect.

José Luís Carneiro criticised the government for a “lack of direct and immediate responses” in the PTRR, calling it a plan of intentions and urging measures that would help companies and families hit by recent bad weather. His comments add political pressure as officials finalise how funds and supports will be delivered. Businesses and residents awaiting PRR‑style aid should track concrete announcements, because the timing and form of direct support may change after the debate. Those expecting fast emergency help should watch ministry statements for disbursement details.

The government raised the minimum wage to €920 for 2026, up €50 from €870, and announced support measures for businesses and workers including simplified layoff rules and expanded income support. The change affects paychecks from next year and is part of a broader income agreement the government cites to boost household income. Low‑paid workers will see higher take‑home pay, while employers should plan for higher payroll costs and check whether sector agreements or contracts change. Workers and small employers should watch official calendars for the implementation date and payroll guidance.

André Ventura of Chega said he will press the government to ensure lay‑off payments linked to the recent bad weather are paid at 100%, and his party has asked parliament for an assessment of the budgetary impact, ECO reports. Ventura spoke at a press conference at party headquarters, framing the demand as protection for workers affected by storm damage. The demand could put pressure on ministers and influence any emergency support rules; employers and affected workers should follow parliamentary debate for any new measures. Workers affected by weather layoffs should monitor official announcements and union guidance.

Correio da Manhã and Observador report a 11.1% drop in the number of people registered as unemployed at job centres in January. The fall may reflect seasonal hiring or statistical factors rather than a structural shift; jobseekers and employers should check local employment centres (centros de emprego) for vacancies and guidance.

The Labour minister (ministra do Trabalho) said the government wants to move from a model focused only on tax incentives toward one that ties incentives to real productivity gains, RTP reports. The statement frames upcoming tax policy discussions rather than announcing concrete changes; employers and workers should watch for detailed proposals that could affect corporate tax treatments or employment incentives.

The government has received 1,922 requests from companies seeking support to maintain jobs after recent bad weather, the labour minister said, according to RTP. The applications are from firms in affected areas asking for emergency measures to avoid layoffs. Employers and workers in impacted sectors should monitor ministry announcements about eligibility and processing of support requests.

European Central Bank president Christine Lagarde told the Munich Security Conference she rejects a tax on capital that does not remain in Europe and instead favours incentives to keep private investment in the single market. She said roughly 37% of European companies are adopting artificial intelligence in production, and argued incentives and regulatory simplification can attract and retain capital better than punitive measures. Investors and business owners should watch EU-level debates on incentives and any policy shifts that could affect cross-border investment.