Portugal panics as Supreme Court squashes austerity

Health and education budgets slashed to fill the black hole.

Portugal's Supreme Court rejected the country's austerity measures on Friday, sparking fear that the country is next in line for Eurozone panic.

The judges ruled that portions of the plans, which cut public sector pay and state pensions, were unconstitutional because they failed to fairly spread the burden of austerity. That put the country's finances on the wrong side of the Troika in a stroke, and has led to a struggle to find alternative ways to plug the gap. If it doesn't, there's a risk that Portugal would have to request a second bailout, or even pay back its first €78bn to the EU.

In a statement, the European commission said:

Any departure from the programme's objectives, or their re-negotiation, would in fact neutralise the efforts already made and achieved by the Portuguese citizens, namely the growing investor confidence in Portugal, and prolong the difficulties from the adjustment.

The Commission therefore trusts that the Portuguese Government will swiftly identify the measures necessary to adapt the 2013 budget in a way that respects the revised fiscal target as requested by the Portuguese Government and supported by the Troika in the 7th review of the programme.

As a result, last night the Prime Minister, Pedro Passos Coelho, announced that the health and education budgets would be slashed to fill the black hole. It's unlikely to be popular in the country, but wouldn't be out of the ordinary for the Eurocrisis, where austerity has been forced on countries for years now.

But the fear being voiced by market analysts is that the routine measures might interact with the thoroughly un-routine situation in Cyprus. As European officials have confirmed that, while Cyprus is not a "template", uninsured depositors really should start thinking about the safety of their money, the fear now is of deposit flight from Portugal.

The Guardian quotes Gary Jenkins of Swordfish Research making the case:

The government said that it didn’t agree with the court’s ruling and that it ‘…places serious difficulties on the country to comply with the…budget targets it has to meet.’ Portugal is supposed to hit a budget deficit target of 5.5% this year. I wonder if people / companies with savings of over €100K in Portuguese banks are feeling entirely comfortable with the situation.

As bad as things might be heading in Portugal now, they would get a lot worse if a run on the banks saw the country needing to intervene in its own financial system. There are no hints that uninsured depositors will be taking any sort of haircut at the moment, but panic is a strange thing – it can come from nowhere, and disappear almost as fast.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The economics of outrage: Why you haven't seen the end of Katie Hopkins

Her distasteful tweet may have cost her a job at LBC, but this isn't the last we've seen of Britain's biggest troll. 

Another atrocity, other surge of grief and fear, and there like clockwork was the UK’s biggest troll. Hours after the explosion at the Manchester Arena that killed 22 mostly young and female concert goers, Katie Hopkins weighed in with a very on-brand tweet calling for a “final solution” to the complex issue of terrorism.

She quickly deleted it, replacing the offending phrase with the words “true solution”, but did not tone down the essentially fascist message. Few thought it had been an innocent mistake on the part of someone unaware of the historical connotations of those two words.  And no matter how many urged their fellow web users not to give Hopkins the attention she craved, it still sparked angry tweets, condemnatory news articles and even reports to the police.

Hopkins has lost her presenting job at LBC radio, but she is yet to lose her column at Mail Online, and it’s quite likely she won’t.

Mail Online and its print counterpart The Daily Mail have regularly shown they are prepared to go down the deliberately divisive path Hopkins was signposting. But even if the site's managing editor Martin Clarke was secretly a liberal sandal-wearer, there are also very good economic reasons for Mail Online to stick with her. The extreme and outrageous is great at gaining attention, and attention is what makes money for Mail Online.

It is ironic that Hopkins’s career was initially helped by TV’s attempts to provide balance. Producers could rely on her to provide a counterweight to even the most committed and rational bleeding-heart liberal.

As Patrick Smith, a former media specialist who is currently a senior reporter at BuzzFeed News points out: “It’s very difficult for producers who are legally bound to be balanced, they will sometimes literally have lawyers in the room.”

“That in a way is why some people who are skirting very close or beyond the bounds of taste and decency get on air.”

But while TV may have made Hopkins, it is online where her extreme views perform best.  As digital publishers have learned, the best way to get the shares, clicks and page views that make them money is to provoke an emotional response. And there are few things as good at provoking an emotional response as extreme and outrageous political views.

And in many ways it doesn’t matter whether that response is negative or positive. Those who complain about what Hopkins says are also the ones who draw attention to it – many will read what she writes in order to know exactly why they should hate her.

Of course using outrageous views as a sales tactic is not confined to the web – The Daily Mail prints columns by Sarah Vine for a reason - but the risks of pushing the boundaries of taste and decency are greater in a linear, analogue world. Cancelling a newspaper subscription or changing radio station is a simpler and often longer-lasting act than pledging to never click on a tempting link on Twitter or Facebook. LBC may have had far more to lose from sticking with Hopkins than Mail Online does, and much less to gain. Someone prepared to say what Hopkins says will not be out of work for long. 

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