Portugal

I have an interest in a Portuguese business and so had reason to be there for a week over the recent General Election.

Here in the UK, we are brainwashed by the chatocracy that life is dire here whilst it is so much better everywhere else, especially in the EU. Funnily enough this is rubbish, Britain may be going to the dogs but so is much for the western world and taking Portugal as an example it is interesting to hear what it is that concerns Portuguese voters.

Immigration, dysfunctional state health service, reduced pensions, corruption, creaking criminal justice system, wasteful public spending, high taxes, lack of economic growth etc, etc. There is also a general frustration that Governments are elected on a mandate to sort things out and they don’t, but instead enact other laws that they did not have in their manifestos.

We are clearly not alone, our oldest ally is suffering the same problems, though there is a big difference in that much of the frustration at the moment is directed towards the Portuguese government but in reality, the power to fix many of these problems is not in their hands. Many Portuguese feel completely swamped by immigrants from the former colonies who have special rights of access and use it as a way of gaining entry into the EU, and this time was the first time that I sensed a tangible discontent at the number of Brazilians who have moved there. The mainstream parties push the narrative that immigration is good for the country, but for many people they feel their country is being taken from them and its character is being diluted too much by the incomers.

The Portuguese have a far more diverse health system then we have here, with none of the ridiculous hangups over private health. There are many good and affordable private clinics specialising in different areas of medicine. However, in the state sector the hospitals are short of staff with many leaving for other countries such as Switzerland and the UK where pay is considerably better.

Since the creation of the EURO in 1999, the country has enjoyed sluggish growth at best and frequent bouts of mild and deep recession. Some sectors have done well such as tourism and wine but, overall, the economy has been weak and taxes have risen albeit gradually but to a high level. The massive pension cuts enacted by the Troika, European Central Bank, Commission and IMF, have been restored but only just and more in financial rather than real terms. Most saw cuts of over 20% in the state pension, some who had made voluntary contributions to their pension pot saw cuts in excess of 60%.

On the economy, the Portuguese Government have been fearful of bringing the whole house of cards crashing down and have not been honest with the people as to the true state of affairs.   They are constrained through membership of the Euro and also by many of the politically expedient decisions made since the Euro crisis. To prevent government bond rates from rising, the Portuguese banks were required by law to purchase and hold for a minimum period a minimum value of Portuguese government bonds. The banking system is therefore very sensitive to inflation and any changes in the value of those bonds.

Portugal is a highly regulated country where running a business one needs to get permission from someone to do almost anything and the state is quick to fine even for the most trivial infringements. Disputes over these might go on for years, and as happened to us when we were told we had done wrong in over-declaring the area of drystone walls we had was on the basis of a calculation made by another Government department and not us. However, the dispute kept a bureaucrat occupied for a good four years before it had to be admitted that we had nothing to pay. A few years later, they brought in as part of the campaign to “Make Tax Digital” that all invoices have to be copied to the department for finance. Invoices have to be created electronically and a copy uploaded to the Financas, which means an almost stifling level of monitoring of business by government.

The result of the election was inconclusive with both main groupings: The AD – Democratic alliance on one side and the incumbent Socialists mired in corruption allegations, the former via their PSD component in Madeira and the latter as a result of sleaze by the recent Prime Minister Mr Costa and the former President Mr Socrates. However, a relatively new party called ‘Chega’ (Enough) stole the show increasing its vote share dramatically to take over 18% of the vote and fifty seats in the two hundred and thirty seat Parliament. Not surprisingly the usual suspects describe them as Right Wing and extreme, but they are stripping off the veneer that the mainstream parties keep trying to polish and pointing out the ugly truth beneath. Equally unsurprising has been the attitude of the mainstream parties to try and ostracise Chega by refusing to do any sort of deal with them. Instead, Portugal may end up with some sort of technocratic Government similar to the one the Italians had under Mario Draghi.

It is worth remembering that when that failed, the Italians put Georgia Meloni in power who was also branded extreme right-wing, but is anything but.

Does our oldest ally hold any lessons for us? In terms of demonstrating that our problems are not isolated to us then yes. In terms of fixing those problems then no, we are, thank goodness not in the Euro or the EU so ought to be able to solve ours without the amount of pain the Portuguese will inevitably have to go through. What Portugal does confirm to us is that if our mainstream politicians don’t deal with the real problems affecting the country then voters will vote for outsiders who tell it like it is and come up with practical suggestions for fixing those problems.

Is Reform UK able to answer the call?

Alastair MacMillan runs White House Products Ltd, a manufacturer, distributor and exporter of hydraulic components to over 100 countries. He is a supporter of the Jobs Foundation.

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