October 4, 2019 / 10:06 AM / 11 days ago

Portugal votes on Sunday. What comes next?

LISBON (Reuters) - Portugal is heading to a parliamentary election on Sunday with Prime Minister Antonio Costa’s Socialists set to win, according to opinion polls, but without an outright majority, after four years of economic growth.

FILE PHOTO: Portugal's Prime Minister and Socialist Party (PS) candidate Antonio Costa attends an electoral campaign rally in Lisbon, Portugal September 24, 2019. REUTERS/Rafael Marchante

This means the Socialists will most likely seek a deal with one or several parties to stay in power.

Here are the possible scenarios:

OVERALL SOCIALIST MAJORITY

An outright majority for Costa appears less likely now than a few weeks ago, when surveys put his center-left party at around 40% and the opposition as much as 15 points behind. But although his lead has halved, this scenario cannot be ruled out.

Freed from the far-left partners with whom the Socialists have been governing, such a government would be likely to reinforce spending controls so as to achieve budget surpluses from 2020 and adopt tax incentives for companies, foreign investment and real estate.

NEW KINGMAKER

A deal with the People-Animals-Nature (PAN) party is this election’s possible new scenario.

If the Socialists fall narrowly short of an overall majority in the 230-seat house, the four or more seats that some polls give the PAN could be enough to help the Socialists govern.

PAN has said it is ready to support a Socialist government if it commits to some of its environmentalist proposals. Analysts say the budget costs of such a deal would probably be much lower than those of other potential pacts.

LEFT-WING DEAL 2.0

Failing the PAN option, Costa may try to renew his deal with either the Communists and the Left Bloc or both, although their relationships have deteriorated of late, especially with the Left Bloc.

Costa has ruled out a formal coalition government but the parties are now likely to make more radical demands in exchange for their support, such as boosting public spending significantly, taxing the wealthy, raising layoff costs for companies and nationalizing energy firms.

MINORITY GOVERNMENT, NO PARTNERS

If the bill for far-left support is too high, Costa would probably seek parliament’s approval for a minority government, which would have to negotiate with other parties to pass legislation on a case-by-case basis.

It is a risky option that could provoke a long stalemate similar to the one currently plaguing neighboring Spain, which has been without a proper government for months and is set to hold a repeat election.

CAN THE OPPOSITION WIN?

Not according to any opinion poll or analyst. The main opposition Social Democrats are still recovering from their worst-ever ballot box result in May’s European election, of 22%.

Polling at around 30% now, they are likely to lose seats compared to 2015. Their coalition partner in the previous government, the rightist CDS/PP, has been losing support, too.

Even if the Social Democrats were to become the biggest party, they are highly unlikely to win an overall majority, meaning that a new governing arrangement between the Socialists and the far-left would still be the most likely outcome. No other alliance is considered remotely possible.

Writing by Andrei Khalip; Editing by Ingrid Melander and Kevin Liffey

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