Once upon a time in Portugal

Once upon a time Portugal was growing and we were led to believe that we were in control of our destiny, but then we were hit by Covid-19 and all our shortcomings were painfully exposed. An economy too focused on tourism and burdened with high public debt and lacking a real strategy to lead us into the digital future, and it was only a matter of time before our luck ran out.

Our Government is exceptional at managing politics but, on doing what counts economically, they are disastrous and once more rode the economic wave until it ended. Due to weak leadership, a lack of strategic planning and execution we are headed for another economic and potential financial crisis. Yes, this crisis is world-wide and couldn’t be foreseen but after handling the health crisis it is vital we handle the economic crisis simultaneously and I fear that Portuguese politics will get in the way of positive action in this regard.

Our Government seems content that it negotiated in total 60 billion Euros of European Union funding to help Portugal recover. The truth is that this is far below what is required to effectively use quantitative easing to solve the problem. A sum of 6 billion euros per year over the next 10 years when our economy will lose 3 times more due to the Covid crisis. This Government is now focused on winning the next elections by staying in power and doing whatever coalitions are necessary to be able to achieve this. This will be another hand brake to progress, as concessions will derail progress. No politicians have lost their income or had sleepless nights thinking about how they will pay salaries, mortgages, school fees or even put food on the table. The Banco Alimentar is already feeding over 4% of the Portuguese population and the numbers will get worse. Personally, I have received numerous phone calls asking for assistance and guidance for businesses that face tough times today. I will never forget one of these calls, a business owner asked if I could buy his two Rolex’s so he could pay salaries for a few more months. Our entrepreneurs are being told to take on more debt. How is this a viable solution, when these entrepreneurs offer us our best hope of getting out of this mess.

Portuguese receive amongst the lowest salaries of all the EU countries and yet it has one of the highest energy, fuel and new vehicle costs. As a percentage of the average Portuguese salary, which is 1418.00 Euros before tax, these are some the highest costs in Europe. Additionally, Portugal has the second highest marginal income tax threshold expressed as a multiple of the average wage in Europe, with the top tax rate in Portugal being 48%. The above facts show us exactly what our children have waiting for them as they start working and contributing to the country. Yes, we have sun, great food and wine but at what cost, due to an inefficient government and lack of planning.

Portuguese citizens face two options. Firstly, in the future we pay more and higher taxes to cover the money we borrow and then misspend, or secondly, we grow ourselves out of this crisis. The second option requires that we have a government that plans and supports businesses of the future. Sets up support and initiatives that attract foreign investment into these fields. We open our borders and attract international talent that wants to be based in Portugal as this will attract further investment. We need to welcome nomads and investors from countries going through tough political and social problems which are many at this moment. We need to encourage reforms in education that will allow us to produce more dynamic, creative and critical thinking talent in future. Our universities need to keep attracting talents from all over that can then be employed by companies setting up interests in Portugal. We need to reform our judiciary making it more efficient and accountable. We need to do everything possible to be a top 10 country in which to do business in and no longer compare ourselves to the bottom performers but to the top performers. We need to remove barriers and bureaucracy and mean it when we say that we are open for business.

Portugal just like many other countries is on a knife edge, and we could easily go the wrong way, by loose this opportunity of changing our course and becoming better in the future. We need to reach our potential quicker, especially as we have so many positives that we can count on, from a central location, low social problems, and an adaptable young talent pool of Portuguese youth. It is time for Portugal to become more relevant in the world again and not only live on its history but build a new a prosperous future for all. We need a roadmap that tells the world we are serious and that they are welcome to be part of this new vision we want to build. There is lots of money in the world it just needs a place that welcomes it and allows it to securely multiply. Portugal needs to be this new safe haven that makes it easy, viable and attractive for investment in the right sectors. Portugal’s problems and challenges in many ways are small and manageable compared to the rest of the world. We just need direction and leadership to execute our future. If we manage to do this, then our story can end with “They lived happily ever after”.


This article was posted at dinheiro vivo, 31/08/2020.

Leave a Comment

Your email address will not be published. Required fields are marked *