Portugal's new PM promises break with austerity

Portugal's new socialist Prime Minister Antonio Costa  promised to break "the spiral of austerity" while implementing a "moderate" programme that respects EU budgetary commitments.

"The priority is economic growth, job creation and the reduction of inequalities, which will allow, on a sound basis, the balancing of public accounts," he said at the swearing in of his government.

The socialist government, which will be supported in parliament by the radical left, "has set a demanding path to reduce the deficit and public debt," he said.

Costa said he intended to "set up an alternative to the spiral of austerity that has compounded the economic, social and even fiscal problems," adding "this alternative is realistic and prudent".

The inauguration of the new government ended weeks of political limbo following inconclusive elections on October 4. The outgoing right-wing coalition won the most votes but lost the absolute majority it had enjoyed since 2011.

After initially retaining his post, former prime minister Pedro Passos Coelho was forced to resign on November 10 after his minority conservative government was toppled by a leftist alliance led by the Socialist Party.

The Left Bloc, close to the communists and greens, has pledged to support the minority socialist government in parliament, without giving up their critical stance towards European budgetary rules and Portugal's membership of NATO.

President Anibal Cavaco Silva, a conservative who remains sceptical about the alliance, said Thursday that doubts "about the political stability and durability" of the government "were not completely dispelled," despite the guarantees given by Costa.

The unity of the leftist alliance will shortly face its first test as Brussels has asked the government to provide as soon as possible its draft 2016 budget, which was delayed by the elections.

EU economic affairs commissioner Pierre Moscovici said on Thursday he had quickly made contact with new Finance Minister Mario Centeno to learn more details about the government's stance on Europe.

"Our programme clearly intends to turn the page of austerity" but at the same time "guarantee the continuity of international commitments and towards the European Union," Costa said in his speech.

Now in opposition, the centre-right Social Democratic Party (PSD) of Passos Coelho, again questioned the legitimacy of the new government.

"Today a government chosen by the people has resigned, overthrown by the parties that lost the elections," Luis Montenegro, leader of the PSD parliamentary group, said.

Passos Coelho's minority government was the shortest in Portugal's history, lasting just 28 days.