State budget news in Portugal

The 2027 State Budget (Orçamento do Estado) passed its initial general vote in parliament with support from the governing Social Democratic Party (Partido Social Democrata or PSD) and CDS-People's Party (CDS-Partido Popular). The Socialist Party (Partido Socialista or PS) abstained alongside PAN and JPP, allowing the legislation to proceed to committee review despite opposition from other parties. Following the ten-hour debate, PS leader José Luís Carneiro criticised the governing coalition for what he described as aggressive attacks against socialists who made the budget's passage possible.

Parliament approved the 2027 State Budget (Orçamento do Estado) proposal on Wednesday at its first reading, after the Socialist Party (Partido Socialista or PS) abstained to avoid a political crisis. The bill passed with 91 votes from the governing Social Democratic Party (Partido Social Democrata or PSD) and CDS-People's Party (CDS-Partido Popular or CDS-PP), while 79 lawmakers from Chega, the Liberal Initiative (Iniciativa Liberal), and left-wing parties voted against.

Socialist leader José Luís Carneiro confirmed his party allowed the measure to advance while demanding amendments during the committee stage. The PS has urged the government to transfer vacant public properties held by the Institute for Housing and Urban Rehabilitation (Instituto da Habitação e da Reabilitação Urbana or IHRU) directly to municipalities, and to abandon proposed tenancy reforms that the opposition argues reduce tenant stability.

The budget targets a surplus of 0.1 percent of gross domestic product and 2.1 percent economic growth in 2027, alongside corporate tax cuts from 19 percent to 18 percent. The final global vote is scheduled for 24 November.

The Common Front (Frente Comum) of public administration unions announced a nationwide strike for 20 November to protest the proposed 2027 State Budget. Union coordinator Sebastião Santana said the stoppage serves as a warning to lawmakers before the final budget vote, arguing that government spending plans fail to address public wages and services. Meanwhile, the government declined to intervene in a separate rail strike scheduled for Friday, stating that negotiations remain the responsibility of state rail operator CP (Comboios de Portugal).

Prime Minister Luís Montenegro defended police handling of recent housing demonstrations as parliament opened the general debate on the 2027 State Budget (Orçamento do Estado para 2027). Montenegro stated that his government remains open to opposition proposals and attentive to living costs, but rejected criticisms from both left-wing parties and Chega leader André Ventura over law enforcement conduct.

The debate took place as demonstrations continued outside parliament in Lisbon. Across the capital, 55 housing activists arrested during a sit-in at Rossio square faced decisions by prosecutors on disobedience charges, while initial approval of the budget bill remains expected after the Socialist Party (Partido Socialista or PS) pledged to abstain on the general vote.

Foreign citizens account for less than 4 percent of all people receiving the Social Inclusion Income (Rendimento Social de Inserção or RSI), according to government figures presented to parliament. Speaking during budget hearings on Monday, Secretary of State for Social Security Filipa Lima reported that 96 out of every 100 recipients are Portuguese nationals. Lima rejected claims that foreign residents place a heavy financial burden on the state's welfare system.

The Public Finance Council (Conselho das Finanças Públicas or CFP) has classified the government's target of a 0.1 percent budget surplus for 2027 as plausible, though subject to execution risks. In a report published Monday, council president Nazaré da Costa Cabral pointed out that state interest costs appear overestimated in the budget proposal, providing a potential financial buffer. However, the CFP warned that the central state administration faces its largest deficit since 2017, leaving Portugal's headline balance reliant on social security reserves.

Minister of Labour, Solidarity and Social Security Maria do Rosário Palma Ramalho proposed a cross-party pact on Social Security during parliamentary hearings on the 2027 State Budget (Orçamento do Estado). Defending the draft budget on Monday, Ramalho stated that revisions to the Labour Code (Código do Trabalho) concerning salary transparency and digital platform work are inevitable next year. She also disclosed to lawmakers that the social security agency holds only 32 vacant residential properties out of 958 total real estate assets, noting that the remainder are warehouses, land, or occupied parcels.

The League of Portuguese Firefighters (Liga dos Bombeiros Portugueses or LBP) has called on the government to quickly establish a formal programme contract (contrato-programa) to finance volunteer firefighter associations. The organisation warned that the current funding model creates financial uncertainty for humanitarian associations managing local fire departments. Volunteer brigades carry out the vast majority of emergency and rescue operations in mainland Portugal.

Socialist Party (Partido Socialista or PS) leader José Luís Carneiro defended his decision to allow the passage of the 2027 State Budget (Orçamento do Estado), warning that triggering a domestic political crisis would worsen conditions for families facing high living costs. Speaking in Valongo, Carneiro cited widespread inflation in food, energy, and housing, alongside political and economic turbulence in major partner countries including Spain, France, and Germany. He said the PS will instead focus on introducing targeted budget amendments during committee debates.

The Socialist Party (Partido Socialista or PS) reached total consensus to abstain in the parliamentary vote on the 2027 State Budget (Orçamento do Estado), ensuring the minority government's spending plan will pass. Party leadership justified the decision by pointing to the need for political stability. Socialist leader José Luís Carneiro also defended ongoing housing protests against criticism from the Democratic Alliance (Aliança Democrática) and Chega.

The government is meeting with trade unions and employers' confederations on Wednesday for Social Dialogue (Concertação Social) negotiations in Lisbon. Talks focus on potential upward revisions to the national minimum wage following the submission of the 2027 state budget proposal. Discussions will also address proposed changes to the Labour Compensation Fund (Fundo de Compensação do Trabalho), which backs employee severance pay mechanisms.

Socialist Party (Partido Socialista or PS) Secretary-General José Luís Carneiro announced that the party intends to abstain on the 2027 State Budget (Orçamento do Estado). Carneiro stated during a visit to Faro that while the budget proposal deserved a vote against based on party convictions, the socialists chose to serve the country and prevent a political impasse. The decision ensures the minority government's fiscal plan can move forward in parliament.

Protesters demanding affordable housing set up tent encampments in Lisbon's Rossio square and Porto's Praça D. João I following weekend demonstrations over living costs. Minister of Infrastructure and Housing Miguel Pinto Luz said he understands the pain of demonstrators but noted that government measures need time to produce results. Ombudsman (Provedora de Justiça) Luísa Neto also requested official records regarding police actions against protesters in Porto to evaluate whether the intervention respected the constitutional right to assemble.

Update: Protesters Defy Police Orders to Maintain Housing Encampments

Housing demonstrators in Lisbon and Porto voted to prolong their encampments until 31 December despite warnings from the Public Security Police (Polícia de Segurança Pública or PSP) that unauthorized overnight camping violates public assembly rules. In Porto, organizers refused private municipal meetings and invited Pedro Duarte to speak directly with them in Praça D. João I. In Lisbon, police warned campers in Rossio after midnight that remaining in the square could constitute disobedience, though officers refrained from immediate eviction.

The Portuguese League Against Cancer (Liga Portuguesa Contra o Cancro or LPCC) renewed its appeal for the government to provide 100% wage compensation for oncology patients on sick leave (baixa médica). The charity reported spending nearly €3 million on social assistance for struggling households in 2025, noting that cancer patients currently lose up to 44% of their net pay during their first month away from work. Extending full sick leave compensation to all cancer patients would cost the state an estimated €14 million annually.

Portugal submitted its draft budgetary plan for the 2027 State Budget (Orçamento do Estado) to the European Commission, committing to European Union net spending growth limits. The plan pairs fiscal discipline with higher military investment, aiming to raise defence spending beyond the NATO benchmark of 2% of gross domestic product (Produto Interno Bruto or PIB). The government also stated it will address housing affordability and begin phasing out fossil fuel subsidies.

The National Association of Parish Councils (Associação Nacional de Freguesias or Anafre) announced that parish councils across Portugal will shut down all services on 4 November unless their core demands are met in the 2027 State Budget (Orçamento do Estado). The association is demanding higher funding allocations, full-time employment status for parish leaders, and updated funding transfers. Anafre warned that failure to reach an agreement could lead to the permanent closure of central government counters run by parishes, including Citizen Spaces (Espaços Cidadão) and local social security desks.

The Portuguese state injected €136 million into public holding company Parpública ahead of acquiring a larger stake in national energy grid operator Redes Energéticas Nacionais (REN). The capital increase occurred immediately before the presentation of the 2027 State Budget and paved the way to purchase a 5.32% share from insurer Fidelidade. The acquisition will raise total public ownership in REN to 19%.

The proposed 2027 State Budget (Orçamento do Estado) includes adjustments to personal income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) brackets, deduction minimums, and standard allowances. Simulations conducted by consultancy EY show that an unmarried worker without dependents earning €1,500 gross per month would save about €37 next year. Larger savings are projected for higher earners, though the ultimate benefit depends on family structure and income level.

Finance Minister Joaquim Miranda Sarmento defended the 2027 State Budget (Orçamento do Estado) against criticism from Bank of Portugal Governor Mário Centeno, who cited poor public expenditure management. The draft budget projects a surplus of €275 million and anticipates public debt will fall to 84.5% of gross domestic product. Miranda Sarmento warned that any opposition amendments from the Socialist Party (Partido Socialista or PS) or Chega creating a budget deficit would be unacceptable.

The Police Professionals' Trade Union Association (Associação Sindical dos Profissionais da Polícia or ASPP/PSP) warned that the salary adjustments in the 2027 State Budget (Orçamento do Estado) fail to compensate for recent inflation. The union argued that the proposed 2.3% adjustment only matches projected inflation rates without restoring lost purchasing power for members of the Public Security Police (Polícia de Segurança Pública or PSP). ASPP/PSP is calling on lawmakers to introduce a formal safeguard clause during parliamentary budget debates.

The National Commission of the Socialist Party (Partido Socialista or PS) agreed to abstain on the 2027 State Budget (Orçamento do Estado), clearing the way for the government's fiscal plan to pass. Party President Carlos César and Secretary-General José Luís Carneiro cited institutional responsibility amid global economic instability, while stressing that the party does not endorse the draft's economic direction. The PS announced plans to present amendment proposals during committee debates to address household costs for fuel, electricity, and groceries.

Portugal secured an initial allocation of €35.1 billion under a compromise proposal presented by Ireland's rotating presidency for the European Union's 2028-2034 multi-year budget. The government insisted on at least an additional €900 million earmarked specifically for the autonomous regions of the Azores (Açores) and Madeira. Prime Minister Luís Montenegro affirmed that Portugal will not accept cuts to regional cohesion funding, even as net-contributor member states like Germany push for deeper EU spending reductions.

The Portuguese government acknowledges the need to increase the housing supply, but it remains unclear to what extent it is willing to change the conditions that constrain it.

The government's proposed 2027 State Budget (Orçamento do Estado) includes the first spending reduction in the health sector since 2011, leaving limited room for public investment. Although the sector receives over €17 billion, hospital administrators and medical associations warned that the plan slows the recovery of the National Health Service (Serviço Nacional de Saúde or SNS). The draft sets targets for 3,000 additional continuous care beds and faster emergency medical response times.

Prime Minister Luís Montenegro faced questions in parliament during a fortnightly debate (debate quinzenal) following the presentation of the 2027 State Budget (Orçamento do Estado). The Socialist Party (Partido Socialista or PS) signaled it will abstain during the vote, which should secure the proposal's approval. Opposition parties, led by Communist Party (Partido Comunista Português or PCP) leader Paulo Raimundo, criticized the spending plan over public sector wages and social investment.

Update: Unions and Employers Push Back on 2027 Budget

Trade unions and business associations criticized the government's proposal, with employer groups citing insufficient investment and the General Confederation of the Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses or CGTP) arguing the measures deepen inequality. The Judicial Staff Union (Sindicato dos Funcionários Judiciais) threatened strike action after warning that planned career upgrades were omitted from the budget.

The government projects that Portugal's overall tax burden (carga fiscal) will remain steady at 35% in 2027, according to the draft budget presented to parliament. The plan includes economic projections for public debt reduction and a balanced fiscal outcome alongside modest economic growth. Opposition critics argued the budget proposal is overly cautious and avoids making necessary reforms to public services.

Tenants will be able to deduct up to €1,000 in housing rent from their personal income tax (Imposto sobre o Rendimento de Pessoas Singulares or IRS) in 2027, up from the current €900 limit. The government proposal maintains tax exemptions on workplace productivity bonuses up to 6% of annual base pay for companies raising salaries by 4.5%. The draft budget also updates the threshold for the high-earner solidarity surcharge (taxa de solidariedade), linking it to the ninth tax bracket.

Update: Budget Expands IRS Relief and Cuts Corporate Tax Rate

Finance Minister Joaquim Miranda Sarmento detailed additional tax measures in the draft budget, proposing a 3.88% update to IRS brackets and rate cuts across the first six brackets. The proposal also reduces the corporate income tax (Imposto sobre o Rendimento das Pessoas Coletivas or IRC) rate by one percentage point, raises the annual subsistence threshold to €13,580, and provides a €50 monthly pension increase.

The privatization of flag carrier TAP Air Portugal will likely not conclude until 2028 due to an estimated 18 to 24 month regulatory review by European Union competition authorities. Finance Minister Joaquim Miranda Sarmento stated that the government will select the winning bidder this month, but revenue from the sale is excluded from the 2027 State Budget (Orçamento do Estado). The minister noted that proceeds from the airline sale will directly reduce public debt rather than alter the operating budget balance.

The Portuguese government confirmed that the national minimum wage (salário mínimo nacional) will increase by €50 to €970 per month in 2027. The increase fulfills an agreement signed under the social dialogue (Concertação Social) framework, though the Minister of Labour left open the possibility of future adjustments. Trade unions had pushed for a higher revision, but the target remains locked in the draft state budget report.

Finance Minister Joaquim Miranda Sarmento is set to deliver the 2027 State Budget (Orçamento do Estado) proposal to parliament, featuring personal income tax (Imposto sobre o Rendimento de Pessoas Singulares or IRS) bracket adjustments indexed to inflation. The proposal includes a minimum €60.52 salary raise for civil servants (funcionários públicos) and an increase to the Solidarity Supplement for the Elderly (Complemento Solidário para Idosos). Initial parliamentary passage is expected after the Socialist Party (Partido Socialista or PS) announced plans to abstain.

Update: Budget Delivered as PS Confirms Initial Abstention

Finance Minister Joaquim Miranda Sarmento presented the proposal targeting a 0.1% surplus and debt reduction to 84.5% of economic output. The PS confirmed it will abstain in the initial general vote, but said it will press for guarantees on storm damage recovery and the Recovery and Resilience Plan (Plano de Recuperação e Resiliência or PRR) during specialty committee debates.

A proposed reduction in personal income tax (Imposto sobre o Rendimento de Pessoas Singulares or IRS) rates up to the sixth tax bracket will cost roughly €400 million without affecting the 2027 State Budget (Orçamento do Estado). The government structured the tax cuts so the treasury absorbs the cost during 2026 by adjusting withholding tax (retenção na fonte) tables for November and December salaries. Parliament is scheduled to debate the measure this week.

Update: Finance Minister Confirms Further Income Tax Adjustments for 2027

During the parliamentary debate on the 2026 tax proposal, Minister of State and Finance Joaquim Miranda Sarmento confirmed that the upcoming 2027 State Budget will include an additional IRS reduction. The relief will take effect through statutory updates to income tax brackets, specific deductions (deduções específicas), and the minimum subsistence level (mínimo de existência). Joaquim Miranda Sarmento noted this adjustment marks the government's sixth income tax reduction since taking office, bringing total tax relief to €2.4 billion.

The Socialist Party (Partido Socialista or PS) confirmed it will abstain during the parliamentary vote on the 2027 State Budget (Orçamento do Estado), allowing the bill to pass. Socialist parliamentary leader André Moz Caldas said the party wants to prevent a political crisis and ensure the state avoids operating under emergency monthly twelfths (duodécimos) in January 2027. The leadership stated it would only change its stance if unexpected measures appear in the final proposal.

Update: Carneiro Reaffirms Budget Abstention Ahead of National Commission Meeting

Socialist Party Secretary-General José Luís Carneiro reiterated that the party will maintain its abstention on the budget proposal to keep the country from falling into political instability. José Luís Carneiro said he expects no surprises from the government and warned that pension cuts or tax increases would remain unacceptable. The PS National Commission (Comissão Nacional) will convene in Lisbon on Saturday to formally assess the decision.

Prime Minister Luís Montenegro rejected calls from the Socialist Party (Partido Socialista or PS) to cancel an agreement with Chega on tenant regulations ahead of the State Budget (Orçamento do Estado) vote. Montenegro stated that negotiations with Chega over housing rules remain separate from budget talks and affirmed that the opposition cannot dictate government dialogue. Socialist leaders had warned that concessions to Chega could jeopardize support for the budget.

The Automobile Association of Portugal (Associação Automóvel de Portugal or ACAP) presented a proposal to phase out the vehicle tax (Imposto Sobre Veículos or ISV) over ten years until its complete elimination in 2036. Prepared in a study by EY, the plan suggests reducing the purchase levy by 10% annually while offsetting lost revenue through increases in the annual single circulation tax (Imposto Único de Circulação or IUC). The proposal seeks to modernize automobile taxation and reduce upfront costs for car buyers.

The government is set to submit the 2027 State Budget (Orçamento do Estado) to Parliament on October 9th. The Socialist Party (Partido Socialista or PS) has already announced it will abstain, ensuring the proposal's approval and leaving the government solely responsible for its implementation.

Update: President Seguro endorses budget cooperation between Government and PS

In his Republic Day address on October 5th, President António José Seguro welcomed the rapprochement between the Government and the Socialist Party regarding the State Budget. Seguro urged political parties to move past adversarial politics and form cross-party commitments on urgent priorities, including housing, healthcare, and cost-of-living challenges.

A strike organized by three unions under the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses or CGTP) caused significant disruptions to schools and health services across the country. While unions claim participation rates between 60% and 90%, the government reported that only 12% of public sector workers joined the walkout. The protest comes as unions demand salary increases ahead of the 2027 State Budget presentation.

The Portuguese Communist Party (Partido Comunista Português or PCP) has announced it will vote against the 2027 State Budget. Secretary-General Paulo Raimundo stated that the party does not need to review the document to reach this decision, as it fundamentally opposes the current government's policy direction. The PCP also criticized the Socialist Party (Partido Socialista or PS) for its likely abstention, arguing that this position enables the government's agenda.

The government's plan to increase the reference value of the Solidarity Supplement for the Elderly (Complemento Solidário para Idosos or CSI) to 720 euros will cost the Social Security budget over 700 million euros in 2027. Prime Minister Luís Montenegro announced the 50-euro increase this week as part of the government's social policy agenda.

Socialist Party (Partido Socialista or PS) Secretary-General José Luís Carneiro announced he will propose that his party abstain during the upcoming vote on the 2027 State Budget. Prime Minister Luís Montenegro has secured this path to political stability by providing guarantees on constitutional revision, pension protection, and the Recovery and Resilience Plan (Plano de Recuperação e Resiliência or PRR). Finance Minister Joaquim Miranda Sarmento welcomed the move as positive for the country, though he warned against distorting the budget during the specialty phase.

The government's proposal to revise the New Urban Lease Regime (Novo Regime do Arrendamento Urbano or NRAU) faces significant opposition in Parliament. The Socialist Party (Partido Socialista or PS) and other parties have signaled they will vote against the bill, which includes measures like accelerating evictions after two months of rent arrears and removing the 2% cap on rent increases for new contracts.

Update: Rental law sent to committee stage

The government's rental reform proposal was discussed in Parliament this Wednesday but will be sent to the committee stage without a vote due to a lack of majority support. Meanwhile, protesters gathered outside the Ministry of Housing in Lisbon to demand the resignation of the minister over the proposed changes.

Prime Minister Luís Montenegro has appealed to the opposition for responsibility during the upcoming State Budget review to ensure political stability. While promising a rigorous and lean budget, he also announced that Paulo Mota Pinto will lead the PSD's project for constitutional revision.

For the third consecutive year, the Court of Auditors (Tribunal de Contas or TdC) has rejected the General State Account (Conta Geral do Estado or CGE). Auditors cited significant omissions regarding the consolidated financial statements of the Central Administration and Social Security, preventing a complete view of the state's financial health. The court also warned that tax expenditure has risen significantly, with over 100 tax benefits lacking proper quantification or control.

The government has initiated meetings with political parties to discuss the 2027 State Budget, which projects economic growth of approximately 2% and a surplus between 0.1% and 0.2% of GDP. The party Chega, represented by parliamentary leader Pedro Pinto, criticized the proposal as insensitive and lacking tax relief, while the party Livre indicated it is unlikely to support the final budget.

Update: Government outlines 2027 budget projections and fiscal costs

The government's budget framework (Quadro de Políticas Invariantes) indicates that the planned reduction of the corporate income tax (Imposto sobre o Rendimento das Pessoas Coletivas or IRC) to 19% will cost the state approximately 300 million euros in 2027.

The Portuguese Communist Party (Partido Comunista Português or PCP) has expressed zero expectations for the government's 2027 State Budget proposal. Secretary-General Paulo Raimundo called for a 'fire and brimstone' policy to combat the rising cost of living, warning that the party will not support the budget if it continues the government's current economic path.

Former Finance Minister Mário Centeno has criticized the government's fiscal narrative, warning that the state may face a 12 billion euro cut to public accounts. Centeno argued that the reported budget surplus is misleading because it improperly includes social security balances, leaving no real budgetary margin for the executive led by Prime Minister Luís Montenegro.

The political party Livre has accused the government of a lack of institutional respect after officials warned that the negotiating margin for the 2027 State Budget is very limited. The party spokesperson stated that conditioning the debate before formal meetings with parliamentary parties is inappropriate.

The government will begin presenting the general outlines of the 2027 State Budget (Orçamento do Estado) to parliamentary groups starting next Monday. Finance Minister Joaquim Miranda Sarmento and Minister of Parliamentary Affairs Carlos Abreu Amorim will lead meetings with the Socialist Party (Partido Socialista or PS) and Chega, as these parties are essential for the budget's potential approval.

The Public Finance Council (Conselho de Finanças Públicas or CFP) has revised Portugal's 2026 economic growth forecast upwards to 2.2%. While the council anticipates a budget surplus this year, it warns that structural deficits are likely to return by 2027, potentially reaching 1.7% of GDP by 2030 due to increased investment in defense and the conclusion of recovery programs.

The National Statistics Institute (Instituto Nacional de Estatística or INE) reported a budget surplus of 0.5% of GDP for the first half of 2026. Finance Minister Joaquim Miranda Sarmento stated that public expenditure remains under control but warned that proposed tax cuts from the Socialist Party (Partido Socialista or PS) and Chega could risk the country's budgetary targets.