President Marcelo Rebelo de Sousa has announced that the outgoing government will become a caretaker administration, but will still be able to access EU recovery funds. Prime Minister Ant贸nio Costa resigned amid an investigation into alleged illegalities in his government's handling of 'green' energy projects and a data center. President Rebelo de Sousa will dissolve parliament on January 15th and call for an election on March 10th. The caretaker government will be limited to day-to-day management and administrative decisions, but the president has discretion to approve projects related to EU recovery funds. Portugal has already received 2.7 billion euros in recovery funds and needs to accelerate the approval of projects to access the remaining 22 billion euros by 2026. The previous government predicted that renewable energy projects could attract investments worth 60 billion euros, or 25% of the country's GDP [e69f380e].
Ant贸nio Costa's resignation amid a corruption probe marks the end of his eight-year premiership in Portugal. Despite the investigation, Costa's economic legacy is expected to endure, as he attracted investment to the country and improved its fiscal stability. His efforts to secure EU funds and implement long-term government plans may be compromised, but analysts predict little financial market impact. Costa's popularity at home was low due to frugality and scandals, but he was praised for his negotiating skills and ability to form alliances. He achieved economic successes, including the fastest pace of growth in 35 years in 2022. Although leaving under a cloud, Costa may be remembered for reviving Portugal's economy.
Portugal has opened applications for a fund of 217 million euros for the Portugal 2030 Innovation and Digital Transition project. The funding is open to projects that have a structural effect on the development, diversification, and internationalization of the economy. The Portuguese Ministry of Economy and the Sea will receive applications until the end of December 2024, with the aim of supporting industrial research and development operations. Small and medium-sized enterprises, as well as business entities in the industrial research and innovation system, are eligible for this funding to create new products, processes, or systems.
Portugal's changes to tax breaks for expats may have unintentionally led to an increase in digital nomads moving to the country. The government's attempts to discourage more foreign residents may have instead triggered a rush of high-net-worth individuals and digital nomads seeking to take advantage of the expiring tax breaks. The tax breaks, which allowed individuals to pay a flat rate income tax of 20% on money earned in Portugal for 10 years, are set to end soon. The changes have caused panic among digital nomads who fear the loss of tax benefits and are now rushing to move to Portugal before the deadline. The influx of digital nomads has been fueled by the flexibility provided by remote work during the COVID-19 pandemic. However, the rising cost of living and real estate prices in Portugal have also led to inflationary effects for the country's citizens. The removal of tax breaks and the increasing barriers to foreign ownership may impact the housing market and the economy. Despite these challenges, Portugal's security and good weather continue to make it an appealing destination for Americans.
Portugal is still mostly in the dark about the scandal that led to the resignation of Prime Minister Ant贸nio Costa. The details of the scandal remain undisclosed, leaving the Portuguese public with limited information. Costa's resignation came amid a corruption probe, but the extent and nature of the allegations are unclear. The lack of transparency surrounding the scandal has left the public speculating and seeking answers. The uncertainty has raised concerns about the integrity of the country's political system and the need for greater accountability. As the investigation continues, the Portuguese people await more information to shed light on the scandal that brought down their former prime minister.
Portugal's anger over corruption and the economy could benefit a radical right party in the upcoming general election. Corruption scandals have caused public dismay and led to the resignation of Socialist leader Ant贸nio Costa. Both the center-left Socialist Party and the center-right Social Democratic Party, which have alternated in power for decades, are tainted by charges of graft and cronyism. The Chega (Enough) party, a radical right populist party, may become a kingmaker in the election and has seen a rise in popularity. The frustrations in Portugal go beyond corruption, with the country remaining one of Western Europe's poorest despite receiving billions of euros in EU development aid. The average monthly wage is around 1,400 euros, and close to 3 million workers earn less than 1,000 euros a month. The election coincides with the 50th anniversary of the Carnation Revolution, which introduced democracy to Portugal, but many feel that the country's lofty ideals have been replaced by grubby political interests. The Chega party, led by Andr茅 Ventura, taps into public disenchantment and aims to bring about change by challenging the status quo and advocating for tighter controls on immigration. The party has forged alliances with right-wing leaders in Italy and France and has used social media to reach younger voters. The election is expected to be a close race between the Socialist Party and the Social Democratic Party, but the rise of the Chega party could disrupt the political landscape in Portugal. [08880ea3] [af357500]
A study by consulting firm McKinsey states that Portugal has the opportunity to gain a leadership position in the ongoing energy transition, which could have an impact of 10-20% of GDP by 2030 and create 500,000 jobs. Portugal has natural conditions to lead the energy transition due to its potential in renewable energy production, including solar and wind resources, as well as the largest lithium reserves in the EU. The country also has developed infrastructures and a stable geopolitical environment. However, Portugal faces competition from other countries, such as the Nordic countries and the USA, and must attract global capital, establish long-term incentive structures, and develop talent and infrastructure to realize the potential gains. [c20d08f4]