Portugal’s next prime minister is likely to be Socialist Party leader Antonio Costa, who engineered the move to team up with the Communist and Left Bloc parties.
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Over the weekend, Costa won support from the Portuguese Communist Party (PCP) and the Left Bloc (BE) for a Socialist-led government, after agreeing a program created to roll back numerous austerity measures introduced by the center-right over the past four years. Coelho, a Social Democrat, has struggled to form an administration after his coalition fell short of the majority it held during the past four years as he steered Portugal though its financial rescue.
“It is possible to improve family incomes without sharing the same opinion about North Atlantic Treaty Organisation”, Costa said, describing the differing opinions between parties. However, it lost its absolute majority in parliament to a leftist alliance.
The anti-euro, anti-Nato communists and Syriza-like Left Bloc will play a supporting role to the moderate Socialists in the fragile set up, but are said to have pledged not to drive Portugal out of the euro.
It is the first time that the three parties have put aside their differences and agreed to work together to form a government. They also speculated about restoring several public holidays that were cut to boost productivity.
Anti-austerity demonstrators outside parliament shouted “victory!” as news of the government’s collapse spread on Tuesday.
A government between the conservative Social-Democratic Party (PSD) and the Christian conservatives of CDS-PP had been appointed on October 20 by President Cavaco Silva despite only holding 39 per cent of the parliamentary seats. But Mr. Costa has often said any government he leads will respect the compact and keep Portugal within the single-currency.
Antonio Costa, who is expected to become Portugal’s next prime minister, had accused the government of being “submissive” when dealing with the European Union, and making more cutbacks than necessary.
“I don’t believe the president is even considering that hypothesis”, Mr Marques Mendes said.
In a sign of investor concerns over the political crisis, the Lisbon stock exchange closed sharply lower, plunging 4.05 percent.
Yields on the country’s benchmark 10-year bond rose 15 basis points to 2.84 percent, compared to 2.29 percent before the elections.
The current government has warned that the left-wing coalition risks turning Portugal into another Greece. A rejection compels the government to stand down, AP reported.
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David Schnautz, from Commerzbank, warned it would be a “weak executive” and predicted early elections would be called next year. Portugal was in limbo Wednesday as its left-wing opposition waited for the green light to take power, after toppling the 11-day-old conservative minority government in a dramatic parliamentary vote.
