The State Budget for 2027 was approved in general terms in Parliament with votes in favour from the PSD and CDS-PP, while the PS abstained, allowing the Government’s proposal to pass, Euronews reports.

The debate lasted two days in a plenary session at the Assembly of the Republic, with Parliament approving the State Budget proposal presented on 8 October by the Minister of Finance, Joaquim Miranda Sarmento.

As was the case last year, the document only received votes in favour from the PSD and CDS-PP. The PS, PAN, and Juntos Pelo Povo (JPP) abstained again in this first phase of voting, with Chega, Iniciativa Liberal (IL), Livre, PCP, and Bloco de Esquerda (BE) voting against.

After the first day of debate on Tuesday, the Secretary-General of the Socialist Party, José Luís Carneiro, ruled out any possibility of changing the abstention previously announced by the socialists, despite disagreements with the Government on housing issues.

Housing and living costs

The housing crisis and the cost of living dominated the debate, with parties exchanging accusations over responsibility for the housing crisis, while hundreds of protesters demonstrated in front of the Assembly of the Republic. Demonstrators criticised Prime Minister Luís Montenegro’s government and called for a general Iberian strike.

The Portugal News recently reported that the Government’s 2027 budget proposal earmarks €1.513 billion for public housing promotion and rehabilitation programmes, alongside plans to fund the construction of 45,000 new homes not covered by the Recovery and Resilience Plan (PRR). The new homes are not necessarily expected to become available in 2027.

During the discussions on the proposed State Budget, Luís Montenegro defended the document against criticism that it fails to address the rising cost of living, arguing that household income has increased by €5 billion over the past two and a half years.

The Portugal News also reported that the proposed budget includes measures aimed at increasing household incomes, with the national minimum wage expected to reach €970 in 2027. The Government maintains its target of raising the minimum wage to €1,100 by 2029 and creating conditions for the average wage to reach €2,000 by the end of the decade. The proposal also forecasts €2.9 billion in household tax relief in 2027.

Government’s tax strategy

On Wednesday, the Minister of Finance stressed that “since April 2024, the Government has embarked on a profound agenda of transformation for Portugal” and that “the 2027 State Budget is a continuation of that path.”

“This is the third budget from the AD government that simultaneously manages not to increase a single tax, while continuing to reduce the tax burden and promoting an economic policy with more growth. All this while maintaining the balance of public accounts,” Sarmento said, adding that “never in this century have taxes been lowered so much in Portugal.”

Independent forecast

The Portugal News also recently reported that the Public Finance Council (CFP) considers the budget forecasts in the proposed State Budget for 2027 to be “plausible” but has called for more efficient management of state resources. While the Government forecasts economic growth of 2.1% and a budget surplus of 0.1% of GDP in 2027, the CFP projects a deficit of 0.1% of GDP, representing a difference of 0.2 percentage points from the Finance Ministry’s forecast.

The debate and voting on the specifics will take place between 18 November and 23 November, with the final overall vote scheduled for 24 November.

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