Portugal's Constitutional Court on Thursday dealt a new blow to government efforts to cut spending and keep the country's EU/IMF bailout on track, rejecting a bill that would have effectively allowed the state to fire public sector workers.
While the bill would have had a relatively low direct impact on the budget deficit in 2014, it was seen as important because of its potential longer-term structural effect on spending cuts.
The ruling may also alarm investors as it suggests the court could throw out more of the government's planned austerity measures, endangering the deficit targets set out in its 78 billion euro bailout deal that ends in mid-2014.
‘The court decided to deem the norms (of the bill) unconstitutional ... due to the violation of guarantees of secure employment,’ the court said in a statement read out by a judge.
Prime Minister Pedro Passos Coelho declined to comment on the decision when approached by reporters while visiting the site of forest fires in central Portugal.
The court has rejected large parts of the government's deficit-cutting plans twice since the country accepted a bailout in mid-2011, each time forcing it to come up with alternative measures. The parliament-approved measure, worth an estimated net 170 million euros in spending cuts in 2014, is one of a package intended to contribute to spending cuts worth 4.7 billion euros that Lisbon
has promised its international lenders by the end of 2014.
While the bill would have had a relatively low direct impact on the budget deficit in 2014, it was seen as important because of its potential longer-term structural effect on spending cuts.
The ruling may also alarm investors as it suggests the court could throw out more of the government's planned austerity measures, endangering the deficit targets set out in its 78 billion euro bailout deal that ends in mid-2014.
‘The court decided to deem the norms (of the bill) unconstitutional ... due to the violation of guarantees of secure employment,’ the court said in a statement read out by a judge.
Prime Minister Pedro Passos Coelho declined to comment on the decision when approached by reporters while visiting the site of forest fires in central Portugal.
The court has rejected large parts of the government's deficit-cutting plans twice since the country accepted a bailout in mid-2011, each time forcing it to come up with alternative measures. The parliament-approved measure, worth an estimated net 170 million euros in spending cuts in 2014, is one of a package intended to contribute to spending cuts worth 4.7 billion euros that Lisbon
has promised its international lenders by the end of 2014.