Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

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Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

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Zoopla wins back customers from online property rival

Zoopla chief executive Alex Chesterman has branded rival OnTheMarket “a failed experiment”, and said that his property site was winning back customers at a record rate. OnTheMarket was set up last year, aiming to compete with Zoopla and Rightmove, the UK’s two biggest property portals. It allowed estate agents to list their properties more cheaply […]

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Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

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BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Categorized | Economy

Portugal unveils plan to extend austerity

Posted on April 30, 2013

Lisbon is to squeeze government spending by €6bn – the equivalent of 3.6 per cent of national output – over the next four years, extending tough austerity measures long after Portugal’s planned exit from a €78bn bailout programme.

The plan, announced on Tuesday, implies severe cuts in government spending on health, education and social security and is expected to meet resistance from opposition parties and trade unions.

    Portugal’s next €2bn instalment of bailout funds is contingent on international lenders approving the strategy.

    Vítor Gaspar, finance minister, excluded further tax increases, saying fiscal tightening to the end of 2016 would focus almost exclusively on spending cuts.

    His fiscal consolidation plan includes an additional €1.3bn in spending cuts this year to replace planned austerity measures that a Portuguese court ruled unconstitutional. The minister said €2.8bn in cuts would be introduced next year, followed by €700m in 2015 and €1.2bn in 2016.

    Lisbon is due to exit its three-year bailout programme in mid-2014, although economists have questioned whether Portugal will be able to avert the need for a second bailout by regaining full access to debt markets by next year.

    Pedro Passos Coelho, the prime minister, said on Tuesday that Portugal would have “little room for error” after the scheduled conclusion of the adjustment programme. The post-bailout period would require “discipline, rationality and long-term vision”, he told a Lisbon conference. Barriers to economic growth would have to be “definitively removed”.

    Announcing the government’s medium-term budget strategy, Mr Gaspar forecast the economy would begin to recover in 2014 from three consecutive years of recession, with national output increasing by 0.6 per cent next year after an expected contraction of 2.3 per cent this year.

    Unemployment was expected to climb to a record 18.2 per cent this year and 18.5 per cent in 2014, he added. Mr Gaspar is to announce in the coming days details of where spending would be cut.

    However, he ruled out further tax increases after introducing what the government itself described as “enormous” rises in January. “The state cannot be any bigger than citizens are prepared to pay for,” he said.

    Under the bailout programme, Lisbon is committed to making “permanent” cuts in state spending totalling €4bn by the end of 2015. The €6bn fiscal tightening package announced on Tuesday extends to the end of 2016 and allows for additional cuts required because of the constitutional court ruling.

    Mr Gaspar said the plan was aimed at cutting the structural budget deficit, which excludes interest payments, to 0.5 per cent of gross domestic product by 2017.