Portugal's governing parties join forces in election pact

The two parties in the centre-right coalition that steered Portugal through a punishing international bailout are seeking to boost their chances of staying in office by running on a single ticket in this year's general election.

Pedro Passos Coelho, the prime minister, said his Social Democrats (PSD), and the smaller Popular party (CDS-PP) would run a single list of candidates in the poll, expected in September or October, in an attempt to elect "a stable majority government".

Amid growing tension between the leftwing Syriza-led government in Greece and its creditors, opinion polls show the Portuguese to be increasingly averse to any fundamental political change.

Touching on these fears, Mr Passos Coelho acknowledged that austerity had left "social scars that need healing", but said that a second term for his coalition would avert the risk of "returning to wrong-headed policies and dangerous illusions".

Compared with voters in other bailed-out European countries, such as Greece, Spain and Ireland, who have elected or show strong public support for parties deeply opposed to tough austerity measures, polling indicates that the Portuguese are less likely to back a radical alternative.

Among other factors, political analysts attribute the continued strong support for mainstream parties in Portugal to the lack of a charismatic radical leader, a historic tendency to weather rather than buck against economic crises, and the absorption of protest votes by a long-established Communist party.

In the latest poll, the combined vote of the two government parties, at 34.7 per cent, is less than three percentage points behind the 37.5 per cent for the centre-left Socialists, the main opposition party. Such an outcome would give neither group an absolute majority.

Surveys also show that the PSD and the CDS-PP are likely to win more votes by standing as a coalition than by running as separate parties, as they did in the previous election in 2011, before agreeing to form a government alliance.

After four years of deeply unpopular spending cuts and tax increases that contributed to a three-year recession, record unemployment and a wave of emigration, few political analysts had expected Portugal's governing parties to be neck-and-neck with the anti-austerity Socialists less than six months before elections.

At a rally on Saturday to mark the 41st anniversary of the "Carnation Revolution" that ended almost half a century of rightwing authoritarian rule, Antonio Costa, the Socialist leader, promised to "turn the page on austerity" if his party was elected.

But in policy proposals announced a few days earlier, Mr Costa appeared to tone down his previous anti-austerity rhetoric, having last year described Portugal's bailout as "an abject failure" that had produced "nothing but poverty".

In more measured language, Mr Costa said that if elected prime minister, he would honour Portugal's commitments to its international lenders and continue to cut the budget deficit broadly in line with the current government's targets.

The Socialists would avert the need for additional austerity with measures to boost economic growth, earnings and employment, he said. These included cutting social security payments for both workers and employers, as well as restoring public sector pay to pre-bailout levels, and removing tax surcharges introduced by the current government.

The Socialists also propose a new inheritance tax and penalties for companies with "excessive" levels of staff turnover. They would not reduce corporate tax by 4 percentage points as the government parties have promised, Mr Costa added.

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