The message from Brussels to Portugal

ccoherence🇧🇷 to caution And the Worry These are the main ideas remaining from the letter sent by the European Commission to the Portuguese Executive, on Tuesday, in relation to the State Budget for 2023 (OE2023) and within the scope of the Alert Mechanism, the risk-checking process for potential macroeconomic imbalances.

Logic: Brussels calls for a “coherent” Portuguese budget with budgetary caution

The European Commission urged the Portuguese government To “take necessary measures” so that OE2023 ‘holds together’ with budget caution, warning of ‘risks’ in deficit and debt to support households🇧🇷

Taking into account the SB2023 proposal sent by Lisbon to Brussels and the Commission’s autumn forecast, the Foundation notes an estimate in Portugal, next year, “that The growth of nationally funded current spending is approaching the growth of potential output over the medium termassuming the planned reduction of measures in response to higher energy prices, including temporary and targeted support to vulnerable households and businesses.

As a result, the growth of nationally funded primary current expenditures Take the risk Not to agree to the Council’s recommendation, “Brussels points out.

to caution: A “warning message” about family support

In general, Brussels is sending a “warning message” to the Portuguese government by asking for budget caution in 2023, given the support for families and businesses due to the severe energy crisis, said the European Commissioner for Energy🇧🇷

“I would say that In our estimation, Portugal is, in our view, a somewhat borderline state🇧🇷 We know we have 10 or 11 member states that we say don’t quite align with our recommendation. […]But stop Our rating for Portugal is that Budget Portuguese is close to what we asked forThis was stated by the European Commissioner for the Economy Paolo Gentiloni at a press conference.

Speaking at the end of the meeting of the Commissioners, which was held on the sidelines of the plenary session of the European Assembly, in the French city of Strasbourg, Paolo Gentiloni admitted that Brussels “is interested in the impact of these developments, especially the measures to confront the energy crisis, to be able to achieve the budget.”

“We do not make the same recommendation that we would make to other member states that do not fully comply, however We have a warning messageThe official confirmed.

Paolo Gentiloni pointed out that “the Portuguese measures will end by the end of this year,” referring to the support approved to help families and companies cope with the energy crisis, If prolonged, “the impact in 2023 will be a burden of more than 2% on the budget”🇧🇷

Worry: European Commission highlights “concerns” about housing and debt

Finally, the European Commission highlighted “concerns” about Portugal related to rising housing prices, with “Signs of overestimation”levels of public and private indebtedness, pointing out Macroeconomics ‘persistent imbalances’🇧🇷

In the report on the alert mechanism, the CEO of the Society notes that “in Portugal, concerns relate to household and non-financial corporate debt ratios, government and external debt in relation to GDP [Produto Interno Bruto] Although debt ratios have resumed their downward trajectory after the COVID-19 crisis.”

“Nominal growth in home prices is accelerating and there are signs of overvaluation of home prices.”he adds.

Other “big concerns” are related to public debtaccording to the European Commission, which warns that “financial sustainability risks are high in the medium and medium-long term”.

Then Brussels concluded in the report that Deep reviews in portugal are needed And 16 other member states, and in the case of Portugal, macroeconomic “imbalances” remain, some of which have been exposed before.

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