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New austerity budget passed by MPs

Trade unionists and pensioners take to the streets against cuts

Thousands of angry trade unionists and pensioners have rallied outside the Portuguese parliament as MPs voted through yet another austerity budget.

Demonstrators shouted: "Government resign" and "Enough of these crooks" outside the building following a call by the CGTP trade union federation to back rallies on a "day of indignation, protest and struggle."

But Portugal's coalition government obdurately used its majority in parliament to force through its 2014 state budget despite the fierce objections of opposition parties and trade unions.

Opposition parties have warned that they will challenge more spending cuts in court once the budget is passed.

The budget will bring a third straight year of austerity and has been demanded by troika creditors from the European Commission, the International Monetary Fund and the European Central Bank, who granted Portugal a €78 billion (£65.3bn) bailout in 2011 and have dominated its government's economic thinking ever since.

The budget aims to cut €3.9bn (£3.25bn) - about 2.3 per cent of gross domestic product.

Among other measures, government workers earning more than €675 (£565) a month will have their pay cut by between 2.5 and 12 per cent and their pensions will be reduced by an average of 10 per cent.

The scale of the cuts and the vicious impact of the resulting recession have sparked mass street protests, provoking a political crisis over the summer that nearly brought down Prime Minister Pedro Passos Coelho's coalition government.

"Without this budget the country will not be able to exit its financial assistance programme at the intended date," Mr Passos Coelho has claimed.

The budget still needs clearance from the constitutional court, which has previously rejected tax measures intended to meet bailout terms and is due to rule in coming weeks on proposed civil service wage cuts.

However the court upheld a measure to extend the public-sector working week by five hours to 40 hours on Monday.

Opposition political parties had challenged the extension, arguing that it undermined workers' rights.

But the court's judges voted by seven to six to maintain the increase in the working week.


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