Portugal election: centre-right coalition retains power but could lose majority

Portugal’s ruling centre-right coalition has retained power in a general election seen as a referendum on its austerity policies, but near-complete results indicated it has lost its absolute majority in parliament.

Prime minister Pedro Passos Coelho’s Portugal Ahead coalition took 38.6% of the vote, according to the partial results, against 32.4% the opposition Socialists of former Lisbon mayor Antonio Costa.

Costa, who campaigned on a promise of easing some of the painful reforms imposed on western Europe’s poorest country, was quick to concede defeat but ruled out stepping down as party leader.

“The Socialist party did not achieve its stated objectives, and I take full political and personal responsibility,” Costa told supporters in the capital.

But he added: “I will not be resigning.”

Sunday’s victory by the centre-right, after four years of swingeing austerity that sent unemployment and emigration soaring, marks a rare case of a bailed-out country re-electing its government.

But the coalition between the premier’s Social Democrats and the conservative Popular Party looks set to fall short of the 116 seats needed to control the 230-seat chamber, leaving them outnumbered by the Socialists and MPs from smaller leftist parties.

Four seats to be decided by votes from abroad will be decided by October 14.

The Left Bloc, the sister party of Greece’s anti-austerity Syriza, looked on course for its best-ever result of 10.2% of the vote and 19 seats, up from its previous score of eight.

A minority government could pose a big challenge for Portugal, where not a single minority administration has survived a full term since the country returned to democracy in 1974.

View image in fullscreen

Coelho’s coalition has imposed tax hikes and spending cuts, but argued during the campaign that the country was beginning to see the fruit of the measures, with a gradual recovery after three years of recession.

The election is one of several this year to test European voters’ readiness to pursue austerity plans intended to restore public finances after sovereign debt crises. Greek voters last month re-elected its prime minister, Alexis Tsipras, even after he swallowed the stringent bailout terms he once rejected, and Spanish voters go to the polls in December.

Victory for the government was unthinkable just a few months ago, when all polls gave a solid lead to the opposition centre-left Socialists, who have promised to ease back on austerity and give more disposable income back to families.

The general election was the first since Portugal exited an international bailout last year.

In the last general election, in 2011, the two ruling parties together won 50.3% of the vote, securing them a stable majority government. The Socialists won 28%.

The formation of the government could depend on president Anibal Cavaco Silva, whose duty it is to name the next prime minister. However the constitution does not specify how the president should pick the winner, whether by the number of votes or the number of lawmakers elected to parliament.

“I’m confident in the job I’ve done … It’s a day of hope because the next four years will be very different from the past four,” Coelho told reporters after voting on the outskirts of Lisbon, urging people to leave their homes to vote despite poor weather.

Portugal’s economy returned to timid growth last year after a three-year recession and growth is now accelerating.

Going into the election, investors were broadly confident that Lisbon would pursue its reforms. Portuguese bond yields held just above seven-week lows on Friday.