A daily bulletin of news & opinion

6 September 2012

Spending the evening strolling around the Baixa district of Lisbon, watching the bars and restaurants fill up as the sun begins to set across the Tagus river, it can be easy to imagine that Portugal’s financial crisis hasn’t begun to bite just yet. The tourists are still here, locals are enjoying after-work drinks and there is a sense of calm.

Easy, but wrong. The crisis is present in every conversation, even if it goes unsaid. It rarely goes unsaid though. There is the filmmaker preparing to move to Maputo. The property developer just back from São Paolo to find finance which local banks refuse to offer. The successful civil servant worried that people think he must be corrupt because he drives a nice car.

Numbers don’t tell a full story but Portugal’s economic figures tell us enough. The unemployment rate is just over 15 per cent. Bond yields are around five per cent, meaning it’s probably cheaper for you and I to get a loan than the Portuguese government. And it’s all getting worse: the economy contracted by 3.3 per cent in the last quarter.

Austerity, pushed by the EU and the IMF and faux-reluctantly backed by Portugal’s centre-right government, is clearly not working. Pedro Passos Coelho’s solution – if it can actually be called that – is to suggest that the country’s young and unemployed (that’s roughly a third of them) should hop on a plane and find a job somewhere else in the world.

Many are doing just that. Whether it’s on-the-rise Lusophone nations like Brazil, Angola and Mozambique, or EU countries with more in the way of opportunity like the UK, Germany and France, thousands are leaving Lisbon, Porto, Braga and elsewhere every month.

Heading abroad may be a solution for the individual but it does little to help a nation when its best and brightest set sail for calmer climes. And it is precisely those people who are now looking for the exit. Only those with the drive and determination to improve their lives are likely to be willing to leave everything they know behind.

Somehow, Portugal needs to persuade them to stay and to do that the government needs to find a way to grow the economy and create jobs. From investing in big construction projects to cutting taxes for start-ups there is no shortage of bold and ambitious moves Passos Coelho’s government could make.

Portugal has been through bigger crises and come out stronger – there is no reason it cannot do the same again.


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