Portugal’s unwelcome membership of the PIGS club (Portugal, Italy, Greece and Spain), the new sovereign pariahs’ group, is a sad reflection of ambition gone wrong and unsustainable burdens assumed in joining the Eurozone. It must seem a long time since Lisbon was the proud host to Expo 1998, although the still unfinished iconic tower at the Expo site serves as a permanent reminder of financial pressures which long pre-date the current crisis.
Lisbon now portrays an image of faded glory, with innumerable crumbling historic facades. And the generally downbeat impression is worsened by the most virulent attack of graffiti to be seen in any major European city. Banksy would struggle to find enough clear wall space to leave even the smallest contribution to Portugese street art.
And pickpockets are a constant threat to even the most wary visitor, rivalled only as a challenge to strangers by an enthusiastic but chaotic public transport system, capable of whisking you 30 minutes up the coast to Cascais with pristine efficiency for a mere €1.70 one day, then stranding you on entirely the wrong side of Lisbon thanks to the ancient number 28 tram the next.
Economic progress is equally haphazard - the budget deficit is 9.3% of GDP, while Portugal’s foreign debt burden sits at a calamitous €177bn or 108% of GDP. This compares badly even with everyone’s favourite Eurozone basketcase Greece, where foreign debt is equivalent to a mere 87% of GDP. Slashing this back to more acceptable levels is fraught with risk, as it is for so many other over-indebted nations. Cutting too much too soon may well choke off any tentative signs of recovery.
The fundamental problem is the relevance of Portugal within the Eurozone family. After decades of exploiting its low labour costs, the expansion of the EU into Eastern Europe and the lowering of trade barriers with Asia have both hit the economy hard. Indeed the EU’s commissioner for economic and monetary affairs recently included Portugal alongside Greece and Spain as countries which have suffered ‘a permanent loss of competitiveness’.
The move in April by Standard & Poor’s to downgrade Portugal’s sovereign debt to junk status was another major blow. As a result of this and speculative pressure in bond markets, the rates it must pay have been pushed back up to the punitive levels it had to pay before it joined the EU.
But despite its economic travails, an occasional oasis of cultural and culinary class can still be found amid the tourist clip joints selling over-grilled sardines and over-priced warm beer to the thin dribble of Lisbon’s tourists this Spring.
In the quiet leafy back streets of the commercial district just off the Avenida da Liberdade is the idyllic garden of Restaurant 33, offering unrivalled service, the best of Portugese fish and meat dishes washed down with very drinkable rosé or chilled white port, and all at a mere €35 a head. So there is still hope.
