Portugal to cut deficit to 4.6% next year; tax hikes and spending cuts

• VAT to rise 1%
• income tax to rise 1-1.5%
• 2.5% rise on large companies income tax
• top-level public sector wages to be cut 5%
• Deficit 7.3% this year, 4.6% next year
• Half of deficit cut to come from tax hikes, half from spending cuts- PM

Keynesian stimulus is a thing of the past on the Iberian peninsula as both Spain and Portugal bite the IMF’s bullet. They may move to a more balanced budget but it will make for a very difficult environment in which to revive economic growth.