Portugal's centre-right Social Democrats (PSD) won yesterday's general election, booting out Prime Minister Jose Socrates' Socialists after they sought a €78bn (£70bn) bailout that will bring deep austerity.
Exit polls by three television stations gave the Social Democrats between 37 and 42.5 per cent of the vote, ahead of the Socialists who scored between 24.4 per cent and 30 per cent. "These are clear results that the Socialist Party wants to recognise," Economy Minister Jose Vieira da Silva said as the Socialists conceded defeat. Mr Socrates, who resigned as prime minister in March, said he was responsible for the defeat and quit as Socialist party head.
The election ends a period of uncertainty that started with the collapse of the Socialist government in March and led Lisbon to become the third country in the eurozone to seek a bailout, after Greece and Ireland.
Social Democrat leader Pedro Passos Coelho is now expected to form a government together with the rightist CDS party. The Social Democrats will inherit a record jobless rate of 12.6 per cent and an expected economic contraction of 4 per cent over the next two years. Welfare and pay cuts, tax rises and threats of strikes will also present challenges. Portugal is locked into debt-reduction targets established as part of the bailout, limiting its room for manoeuvre.