The risk of government collapse in Portugal has risen

Significance

Tension between the president and prime minister comes against the backdrop of corruption allegations that have consumed the executive, with eleven members leaving the government in its first nine months in office.

Impacts

• The far-right CHEGA party is benefitting the most from the cost-of-living crisis and scandals engulfing the government.
• Rising house and rent prices, especially in urban areas, will likely result in further protests.
• The persistence of drought over the coming months threatens to keep inflation relatively high and damage growth prospects for this year.