The decision of European Commission President Jose Manuel Barroso to give a €26 billion handout to Portugal’s struggling economy led to criticism from UK lawmakers and supporters of the country’s exit from the Union. The handout is intended to boost employment through training and education and accelerate the revival of Portugal’s economy by 2020.
One of the biggest banks in Portugal, Banko Espirito Santo, reported a €3.6billion that raised doubts over its solvency even as unemployment has surged to 14.3 percent. Latest Eurostat figures indicated that the government debt problem faced by Portugal had exceeded 2010 levels, which was when the Eurozone financial crisis erupted.
The former Prime Minister of Portugal unveiled the “Partnership Agreement” that allows Portugal to access €21.46 billion for training and education, €4.06 billion for rural development and €392 million for the country’s maritime and fisheries sector. The funds will be supplied over a period of six years from 2014 to 2020.
Critics from the UK highlighted that the country’s share will be around £2.7 billion to be paid over the next seven years. They derisively called the handout as a ‘parting gift’ by the President of the European Commission to his home country. Supporters of campaign groups advocating Britain’s exit from the European Union criticized the bailout of less-disciplined economies by stronger and fiscally-responsible nations like the UK and Germany. Critics claimed that Portugal’s recovery was possible through its exit from the Union and restoration of its national currency.
Defending the handout, a European Commission spokesman pointed out that the Commission has no role in determining the amount of funds received by any country. The amount of cohesion funds offered depends on a consensus-based objective formula that considers the nation’s population and poverty levels.
It is pertinent to note that under the Partnership Agreement; Britain’s agreement will be finalized later in 2014, will result in inflow of €11.8 billion for development of less-developed regions like Cornwall and parts of Wales. The funds are secured by the EU’s seven-year budget period, which enables private businesses in the EU to access additional private investment at a time when banks are still wary of lending to small businesses.
It remains to be seen whether the agreement with Portugal will cause public support to swing in favor of Britain’s exit from the EU.