Bankinter | With votes in favour from the PSD (Social Democratic Party) and the CDS (Democratic and Social Centre) — which form the AD coalition —, the abstention of the PS (Socialist Party) was enough for the government to pass its first major parliamentary test. The document now enters the speciality phase, in which the various parties may table amendments, although the government has already warned that the scope for significant changes will be limited. The final vote is scheduled for 27 November.
Analysis team’s view: As we anticipated, the approval of the budget was highly likely, especially after the political instability the country experienced last year, when the rejection of the budget led to early elections. To avoid this scenario, the PS chose to abstain, which is a sign of institutional and political stability. From an economic point of view, the news is positive. This perception of stability could boost investor confidence and keep the spread on Portuguese debt, which is at historic lows (38 bps versus German debt), in check. Inflation is close to the ECB’s target (2%), at around 2.4%, which favours macroeconomic stability. Our forecasts point to solid economic growth in 2025 (1.8%) and inflation falling to around 2.3% by the end of this year.
