Reject austerity to defeat populism, Portugal's socialist prime minister António Costa tells EU

'Our affirmation of sovereign democracy means that people regain the trust in the democratic institutions and in their belief in the European Union'

Portugal’s rejection of austerity under a left-wing government has stopped populism from taking root in the southern European country and restored trust in the EU there, its Prime Minister has told European officials.

Speaking at the European Parliament in front of an audience including Jean-Claude Juncker and MEPs from the 28 member states, the country’s Socialist prime minister António Costa said that his Government’s alternative economic approach had seen Portuguese people regaining their “trust in the democratic institutions and in their belief in the European Union”.

Mr Costa, whose party is arguably the most successful left-of-centre group in continental Europe at a time when others are facing electoral annihilation, reeled off a list of economic achievements. He cited higher growth, reduced inequality, increasing employment, and lower budget deficits.

Unlike other EU member states, Portugal, which was once seen as among the most troubled EU economies, had refused to implement austerity measures and instead sought to put its economy back on track through state investment.

“In Portugal we devised an alternative to the austerity policy: focusing on higher growth, more and better jobs, and greater equality. The rise in earnings made economic operators more confident, resulting in the fastest economic growth since the beginning of the century and it has produced a sustained rise in private investment, exports, and growth,” Mr Costa said.

“Of course, we did things differently, but we stuck to the rules, and today our public finances are in far better shape than they were three years ago. In 2017 we exited the excessive deficit procedure and last year we had the lowest deficit since democracy was restored. Last week the European Commission removed Portugal from the list of countries with serious macroeconomic imbalances.

“However, the most important point of all is that our affirmation of sovereign democracy means that people regain the trust in the democratic institutions and in their belief in the European Union. As we can see in the last eurobarometer, the Portuguese clearly strongly support the EU: that is why we are not suffering from any existential crisis. We wish to build our future in the EU with all those who want the same thing.”

While populist, nationalist, and xenophobic parties have flourished across large parts of Europe since the economic crisis, Portugal has been largely free of any such groups. Mr Costa leads a minority socialist government with the backing of the Communists, the radical Left Bloc and the Greens.

Elections in Italy earlier this month, which had a EU-backed centrist pro-austerity government all but imposed on it in 2011 under Mario Monti, have produced a huge swing to populist and far-right parties.

“What sets democratic politics apart from populism is that democratic politics does not tap into fears – it does not feed on problems. Quite the opposite: democratic politics feels people’s problems, combating fears and angst and give hope back to people in their future,” Mr Costa said.

“We cannot confront globalisation by closing borders or building walls, nor drifting into a protectionist mindset or drifting into xenophobia. We must make it patently clear that these are not and will never be options for Europe.”

Addressing the future of Europe the Portuguese PM said the Eurozone should have a “fiscal capacity”, arguing that the ability to tax and spend “could help maintain stability when faced with external shocks” but also that “its main aim must be investment”.

Mr Costa appearance in the European Parliament is part of a series of appearances by EU leaders to discuss the future of the European Union.