November 16, 2012 / 1:15 PM / 5 years ago

UPDATE 1-Portugal opposition says austerity has failed

2 Min Read

LISBON, Nov 16 (Reuters) - Portugal's experiment with austerity has failed, and the economy is in a worse state than the government or the country's lenders realise, the head of its main opposition party said on Friday.

Socialist party leader Antonio Jose Seguro also said he did not think the country would meet its budget goals, rejecting a planned 4 billion euros of spending cuts in 2013-14 as an attack on the country's welfare state.

"The country is in a more serious situation than the government and 'troika' (of lenders) realise," Seguro told journalists. "There is a consensus in Portuguese society that the austerity recipe has failed."

He said he made his view clear during a meeting with lender representatives from the European Union and International Monetary Fund.

A cross-party consensus supporting the austerity imposed under Portugal's bailout programme had differentiated the country from other struggling euro zone countries was shattered at the end of summer.

At that time the government, which has a solid majority in parliament, upset the Socialists by pressing ahead with new tax hikes to make up for falling revenues.

Portugal's economic situation is becoming more critical with increasing signs of a deepening slump ahead of the introduction of the greatest tax increases in living memory next year.

Workers staged a general strike this week and opposition to austerity is rising.

The IMF and EU officials are in Portugal to carry out the sixth review of the economy under a bailout.

"I don't blame the officials from the troika (for the situation). I blame the political leaders of the institutions that make up the troika, the European Commission, the ECB and the IMF," Seguro said.

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