Neither of these two smaller leftist parties will be given ministerial portfolios and will therefore theoretically take their seats alongside a PS government to the left of parliament, but as opposition MPs. Both parties have pledged to keep the PS in power after putting pen to paper over a series of measures. They almost entirely centre around a marked shift away from austerity which has dominated the previous government’s policies since 2011.
Left Bloc leader Catarina Martins, speaking on RTP television on Wednesday evening, said her party opted not to form a coalition with the PS due to its insistence of complying with the EU Treaty on national budgets and the condition that Portugal did not seek to renegotiate its debt with international partners.
“But I don’t think our agreement is any weaker because of this”, argued Martins.
When challenged on her party’s position to accept Socialist decisions in relation to Europe, the Left Bloc leader said: “I believe these are clear political choices and it is much better if we are clear where we agree and where we don’t.”
Despite her point that the Left Bloc would not hesitate to bring down the government should it implement “an absurd measure such as privatisating the water sector”, she pledged allegiance with the PS so long as they “reinstate wages, protect the social state and do not carry out any privatisations.”
Much of Portugal’s tenuous economic recovery in recent years has been due to external factors such as soaring exports and record tourism figures, coupled with severe austerity measures imposed by international lenders.
According to the outgoing Finance Minister, the country’s books are in order, and no government should fear any “surprises” or “excuses for its own failure.”
Maria Luis Albuquerque was addressing Parliament on Tuesday, and warned that the series of anti-austerity measures agreed to by the leftist alliance could drive the country back to the state of “pre-bankruptcy” which the coalition inherited from the previous Socialist government in 2011.
But the leftist alliance holds the conviction that increasing spending power across the board will not only result in uplifting the millions of workers and pensioners who have seen their spending power diluted or at best frozen. They also advocate that creating jobs for countless others who have been forced into dole queues will translate into sustained economic growth.
While the leftist agreement is built on the foundation of strengthening the social state and the benefits system, there are also measures aimed at aiding growth for companies, such as the expanding of fiscal stimuli for small and medium enterprises or slashing VAT for restaurants from 23 to 13 percent.
Wages will also be progressively raised for low income earners, such as those on the minimum wage, pensioners who have seen their monthly benefits frozen or civil servants whose wages have suffered a succession of cuts.
Other popular measures will include the reintroduction of the four bank holidays done away with by the previous government, reducing the number of students per classroom, cutting the cost of school books, boosting the national health system with more workers and material while also ensuring pre-schoolers are guaranteed placement at a nursery school by 2019.
Privatisations, carried out by the previous government, will be reversed, though this might prove problematic on a legal front. Any further privatisations have been ruled out for the coming four years.
The success of the leftist alliance appears dependant on economy recovery, with most of the more popular measures presented reliant on ever-increasing state coffers. If this scenario were to unfold, the left could be heading for a landslide victory when elections are next held, while Portugal could serve as a case study in the future as to the ills of austerity.
But economic difficulties in the future, both domestically and internationally, could see the Socialists not wanting to be branded serial failures and implement measures which could cause a rupture in this unprecedented alliance.
In this instance, the Left Bloc and Communists would be expected to withdraw their support.
But as they are likely to be measures which the centre-right would ordinarily have implemented, the coalition would be hard-pressed to vote in favour of a leftist motion purely to overthrow the government and quench their thirst for power – exactly what the fallen government has accused the Socialists of doing when they refused to support to the centre-right and form an alliance with the left.
In the meantime, the most probable development is that President Cavaco Silva will in the coming days announce the Socialist leader as the country’s next prime minister.
Meetings with industry advisors, political leaders, bosses, unions and party leaders are set to take place in the coming days, but with Cavaco Silva on an official visit to Madeira next Monday and Tuesday, a decision on the country’s political future might only be likely by next Wednesday at the earliest.

The President can also ask Pedro Passos Coelho to continue at the helm of an interim, albeit an entirely toothless government until early elections next June. However, this is a scenario which a series of media reports, quoting insiders, has been rejected by the outgoing prime minister who would rather sit in opposition than be ruled by a rebellious parliament.