Portugal will have to make a fiscal adjustment of around 0.3% of Gross Domestic Product (GDP) to comply with Brussels' new rules, being the country with the lowest need for fiscal adjustment among the 18 Member States that have submitted budget plans medium-term structural measures analysed by the Public Finance Council (CFP), according to a report by ECO.

The conclusion is contained in the analysis of the Structural Budget Plan sent by the government to the European Commission on October 11. In the document, the government commits to an average net expenditure growth ceiling of 3.6% between 2025 and 2028.

Of the 18 countries that had presented plans at the closing date of the CFP report, 14 belong to the eurozone and allow the institution chaired by Nazaré da Costa Cabral to consider that “the reference trajectory indicated for Portugal falls within the upper limit of others published.”

“This is particularly evident when the proposal (3.6%) is compared with that made for countries with debt exceeding 90% of GDP, such as Spain (2.9%), Italy (1.5%) and Greece (3.1%)", he points out.

However, he explains that it essentially results from a more favourable starting fiscal position, including invariant policies, which leads “to the existence of a smaller additional adjustment”.

“In fact, in addition to Cyprus and Estonia, countries without the need for an improvement in the structural primary balance, or a more restrictive orientation of budgetary policy, Portugal has the lowest need for adjustment among the known Plans (approximately 0.3 p.p. of Gross Domestic Product)”, he emphasizes.

Even so, he notes the need to maintain a “significant surplus structural primary balance, equivalent to 2.5% of GDP in 2028”.

The CFP also points out that, “in the case of Portugal, the average potential growth estimated by the Commission for 2025-2028 is 1.6%, identical to that of Spain and close to that of Greece (1.3%) and Slovakia (1.7%)”. Italy, Estonia and Finland show growth of less than 1%, while Cyprus and Slovenia grow by 2.5% and Malta by 4.7%.