Portuguese demand end to austerity

Nearly half a million people gathered outside the Finance Ministry in Lisbon, carrying placards that said: "Screw the troika, we want our lives back."

They also sang the popular song Grandola, associated with the 1974 Carnation Revolution that ended the regime of Marcelo Caetano, heir to dictator Antonio Salazar.

"This government has left the people on bread and water, selling off state assets for peanuts to pay back debts contracted by corrupt politicians to benefit bankers," said film director Fabio Carvalho, who joined the protesters in Lisbon.

Portugal is expected to endure a third straight year of recession in 2013, with a 2 per cent contraction.

The overall jobless rate has grown to a record 17.6 per cent.

Huge numbers of young people joined the marches. About two in five under-25s are out of work.

The General Confederation of Portuguese Workers, the country's largest trade union, also supported the marches and swelled the numbers with angry members.

After years of tax rises and welfare cuts, the government want to cut another €4 billion (£3.5bn) over the next two years.

The national health service, education, pensioners and government workers are likely to be the hardest hit.

Last year's budget was Portugal's toughest in living memory, imposing tax rises that robbed many workers of a full month's wages.

The right-wing government is locked into a cycle of cutbacks demanded in return for the €78bn (£67.5bn) bailout by the troika of the European Commission, the International Monetary Fund and the European Central Bank.

Meanwhile, European Commission president Jose Manuel Barroso praised Portugal for reducing its budget deficits.

"We see that progress can be made when the political will of the government and the determination of the people unite to build a better future," he told a Dublin conference - clearly not an opinion shared by the Portuguese people.