Lisbon, May 21, 2026 (Lusa) - The European Commission has struck a more pessimistic tone than the Portuguese government, anticipating that Portugal will slip from a budget surplus to a deficit of 0.1% of GDP (Gross Domestic Product) in 2026, due to the impact of post-storm support measures and tax cuts.

In the spring economic forecasts, released on Thursday, Brussels forecasts a deficit of 0.1% of GDP in 2026 and 0.4% in 2027, assuming current policies remain in place, while the government projects a balanced budget for 2026.

The European Commission explained that the decline anticipated for 2026 reflects the cost of state support measures implemented in response to a series of severe storms in January and February.

Furthermore, the reduction in the balance in 2026 and 2027 “also results from measures that have worsened the balance, such as the reduction in personal and corporate income tax rates”.

“The budgetary outlook faces risks related to the financial fragility of state-owned enterprises and the liabilities arising from public-private partnerships,” the European Commission warned.

Regarding public debt, the downward trend is expected to continue, albeit at a slower pace.

The ratio of public debt is projected to fall to 87.6% of GDP in 2026 and to 86% in 2027, due to ongoing primary surpluses and a favourable growth-interest rate differential.

MES/MYAL // ADB.

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