THE SUNDAY TELEGRAPH: The eurozone crisis threatens to flare up again this week after Portugal's constitutional court blocked the country's planned austerity programme.
The single currency bloc has already been destabilised by Cyprus and now faces fresh uncertainty if Lisbon cannot find new savings to meet the conditions of its €78bn (£66bn) bail-out.
Pedro Passos Coelho, Portugal’s prime minister, said last night that the rejection posed “serious obstacles and risks” to Portugal’s progress in meeting its bail-out commitments, but that it would “do everything to avoid a second rescue”.
“The government is committed to all the objectives of the programme,” he said. Luis Marques Guedes, secretary of state for cabinet matters, said at the weekend: "The constitutional court's decision places serious difficulties on the country to comply with the goals and budget targets it has to meet. The government doesn't agree with the interpretation of the constitution."
The court ruled that planned cuts in salaries to state workers and payments to pensioners were in breach of the constitution. The measures were expected to save as much as €1.3bn annually, a large slice of the €5bn of fiscal consolidation planned for this year. Mr Passos Coelho said that he had asked ministries to slash spending in order to avoid further tax rises. » | Philip Aldrick, Economics editor | Sunday, April 07, 2013
