BBC News | Friday, 12 March 2010 | 23:22 GMT
Portugal’s parliament has approved an austerity budget aimed at cutting its deficit to the level permitted for countries using the euro currency. The government hopes that by reducing the country’s debt it will also restore investor confidence. Prime Minister Jose Socrates described the vote as a political victory for the country. But trade unions have threatened to strike over plans for a public sector wage freeze and pension cuts. There have been concerns that Portugal could run into the same trouble as Greece, where an enormous budget deficit has unsettled financial markets. "This is the budget the country needs," Mr Socrates said after the vote.
The minority socialist government has portrayed this year’s budget – and a medium-term austerity programme yet to be submitted to parliament – as key to restoring Portugal’s credibility with investors. The budget foresees a cut in Portugal’s public deficit by one basis point to 8.3% in 2010. The government says it wants to return to below the EU-mandated