The four crises and seven structural shifts of the last eight years

António Costa took stock of the government’s action in the last eight years, where he was Prime Minister, during a press conference held in the official residence.

He started by listing the four crises the Government had to overcome – the financial and public accounts crisis, the wildland fire crisis, the Covid-19 pandemic, and the inflation crisis – and concluded by referring to the seven structural shifts carried out over the last eight years: the economy’s growth, the rise in employment and income, the highest qualification levels among the population, the rise in the economy’s competitiveness, the lowering inequality, the lead in the fight against climate change, and the advances in the State reform, namely concerning a decentralised system. 

FOUR CRISES

The financial and public accounts crisis

The first crisis mentioned by the Prime Minister was the financial crisis. "Notwithstanding the incredibly serious situation we faced due to the pandemic, we remained on a constant public account improvement trajectory, which enabled us to move from an excessive deficit in 2015 to a surplus in 2023", he indicated.

António Costa also referred to the financial system’s greater stability. "The state-owned bank, which many felt should be privatised and that it would be impossible to capitalise, is today not only solvent, but also generated due revenue for the Portuguese economy and citizens", the Prime Minister claimed. 

The wildland fires crisis 

The second crisis noted by the Prime Minister was that of wildland fires, the answer to which included restructuring the civil protection system and a budget reform, which offered prevention a clear priority over fighting. As a result, "if we were to add up the entire area burnt down in the six years between 2018 and 2023 [the result] is 60.7% of the area burnt down in 2017 alone", he stressed.

The Covid-19 pandemic 

The country’s response to this third crisis was "worthy of note", claimed the Prime Minister. "We were the first country in the world to reach a vaccination coverage of 85%. And the efforts to support the economy and households allowed us to be one of the countries that best came out of the pandemic", he added. 

The inflationist crisis

The fourth crisis arose from the effects of the pandemic, which was still felt, and the war between Russia and Ukraine. This conflict "worsened a situation that came from the pandemic, with the breakdown in supply chains, which led us to the greatest inflationist crisis of the last 30 years". 

The rises in interest rates by the European Central Bank to respond to rising inflation "in a society such as hours where mortgages have a high significance and the variable rates are clearly dominant", together with rising food costs, shot up household costs. 

"From the start of 2022 to October 2022, inflation soared. We hit 10.1% inflation in October 2022 and since then we have been on a slow, yet sure, trajectory to lower inflation, until we hit 2.1% last February and the forecast is we will remain on that lowering trajectory", said the Prime Minister.

The Prime Minister stated that between 2000 and 2015 the country alternated between recession and stagnation. "Only in one year of these 15 did we grow above the European average: in 2009. From 2016 onwards, the reality has been quite different ", he said. "In these eight years, the country grew ten times more than what it had grown in the previous 15", he signalled, noting the 2.1% growth, including in the two pandemic years, "where product naturally fell drastically". 

More jobs and more income

The creation of jobs and improvement in employment conditions contributed to this economic growth. "Today, we have a record number of people working in Portugal: 5 million people. That is an additional 629 thousand jobs than in 2015. And in a context where it was possible to not just to have minimum wages grow 62%, but also average wages having grown 27.7%", the Prime Minister indicated.

In addition to the rise in the minimum wage, the Prime Minister also noted rising pensions and improvement in net income. 

Always in line with the Social Security Basis Law, in these eight years, average pensions rose 23.3%, "with all the rises set down in the law, as well as extraordinary rises to counter inflation". 

The improvement in net income came from the "successive drops in income tax IRS" and the "successive measures of non-monetary transfers that cut household expenses", such as making school books free, reforming the costs of public transports, increasing the number of households that benefit from energy social rates and the "significant" cut in pubic university fees, that went from more than one thousand euros to 697 euros per annum.

A more qualified country

This was the shift the Prime Minister considered "perhaps brings the greatest consequences for the future". António Costa mentioned the "highly significant" drop in early dropouts, where this year we are below the EU average for 2030, and the rise in the number of youths aged 30 to 34 years who completed higher educaiton in 2015, which can only rise, since "if we look at the youths who are 20 years old, 39% attended university in 2015, and today it’s 54%". 

A more competitive economy

"Every year, we beat records in attracting foreign direct investment. Every year, we beat corporate investment records and corporate investment went up 85% between 2015 and 2023", the Prime Minister stated, advocating that "what offers a modern economy competitiveness is its capacity to have qualified jobs, being more innovative, and this is what enables that innovation". 

António Costa also added that the rise in exports, which in 2022 accounted for more than 50% of GDP, and the change in the nature of exports. "Exports of high and medium tech goods increased 71% over these last eight years, which means that complexifying, qualifying, and the added value of our economy have been clearly on the rise".

Less inequality

"Today we have 600 thousand people less in poverty or social exclusion, and especially 226 thousand children less living in poverty or social exclusion", said the Prime Minister.

Taking the lead in fighting climate change

The sixth shift had to do with the country’s position in taking the lead in fighting climate change. "We were the first country in the world, at the2016 Marrakesh COP to undertake the goal of being carbon neutral by 2050. Our Climate Law imposed on us a greater ambition of hitting that target in 2045 rather than 2050". 

Since 2017, Portugal has cut back its GHG emissions by 17% "due to the public transport policy and bringing targets such as closing down coal-fuelled power stations forward and increasing the capacity to generate energy using renewables", the Prime Minister signalled.

Advances in the State reform 

The last structural shift mentioned by the Prime Minister had to do with the advances in the State reform, namely concerning the decentralisation of powers, such as transferring the PSP’s traffic tasks to the Lisbon and Porto municipal police, making Carri or STCP (public transport) municipal, or the agreement with the National Portuguese Municipalities Association (ANMP) to transfer powers. Lastly, António Costa referred to the reform of the Regional Development Coordination Committees (CCDR), that are now more democratised and with greater autonomy. 

View the Prime Minister’s presentation here