Portugal’s Parliament has approved a plan to hike taxes and cut salaries and welfare benefits next year in a bid to reverse waning market confidence in its public finances.
Portugal’s high debt and low growth have alarmed investors, fuelling speculation it may be the next European country to need a bailout after Greece and Ireland.
The government insists it won’t need financial rescue, saying the austerity measures will restore fiscal health.
The austerity measures carried a political cost for the minority Socialist government which managed to pass the plan on Friday only after negotiating its content with the main opposition party. All other parties voted against it.