Carneiro Urges PS to Abstain, Let 2026 Budget Proceed

A quiet but consequential shift is unfolding inside Portugal’s main opposition party. José Luís Carneiro, regarded as the Socialist Party’s most pragmatic figure, plans to ask the PS Political Commission to let the government’s Orçamento do Estado 2026 proceed to detailed debate by casting a conditional abstention in the first parliamentary vote. If approved, the move would ease immediate pressures on the minority centre-right cabinet while giving the Socialists wide room to demand changes later.

A Strategy of Conditional Cooperation

Carneiro argues that a blanket rejection of the budget at this early stage would “lock the country into unnecessary turbulence.” By recommending abstention in the general vote, he signals a willingness to keep essential state machinery running, yet keeps the door open to “vote against” should key red lines—public health funding, regional investment and salary policies—remain unmet. Within the socialist benches, the initiative is framed as an effort to avoid the image of obstructionism without granting the minority PSD–CDS executive a free ride. Party officials underline that an abstention still obliges Prime Minister Luís Montenegro to negotiate line-by-line once the document reaches committee.

What the 2026 Budget Contains

The draft presented on 14 October seeks to cap the deficit below 1% of GDP, raise the national minimum wage to €985, deliver €2 B in new health-service funding, and shave 1 percentage point off the headline corporate tax rate. It also earmarks €600 M for rail modernisation—an item of particular interest to northern mayors—and continues the roll-out of EU Recovery and Resilience Plan funds. The finance ministry forecasts 2.1% growth next year, a projection some economists label optimistic given weak German demand. Still, investors cheered the prospect of public accounts remaining on a “discipline trajectory,” sending 10-year bond yields to their lowest level since spring.

Internal Chess inside the PS

Carneiro’s stance deepens the ideological divide with party leader Pedro Nuno Santos, whose supporters lean toward a tougher line. The former interior minister is not mounting an open leadership challenge, but his bilateral contacts with moderate mayors, union leaders and Catholic social groups reveal an alternative power nucleus inside the PS. Allies describe the abstention gambit as part of a broader vision: positioning the Socialists as centrist guardians of stability ahead of municipal elections in 2026. Critics counter that such pragmatism risks blurring distinctions with the government and could alienate the left-wing base invigorated during António Costa’s majority years.

How Other Parties React

Chega’s André Ventura blasted the manoeuvre as “socialist camouflage,” vowing to vote against what he calls a “tax-and-spend monster.” Liberal Initiative sees room to bargain for deeper corporate cuts but warns it will not rubber-stamp a plan that fails to curb social security contributions. To Carneiro’s left, BE and PCP accuse PS of “normalising austerity.” Within PSD, senior whip Hugo Soares privately welcomed the possibility of Socialist abstention, noting it would spare the government from chasing unpredictable far-right votes while reinforcing an image of institutional maturity in Brussels.

What This Means for Households and Business in Portugal

For families, the most immediate takeaway is that state salaries and pensions are unlikely to face the delays that typically accompany a failed budget. Mortgage holders also breathe easier; markets have interpreted the emerging cross-party détente as lowering fiscal-policy risk, nudging Euribor-linked rates downward. Exporters, however, remain cautious: without faster approval of infrastructure projects, logistic bottlenecks along the Lisbon–Setúbal corridor could persist. Still, analysts at BPI point out that a cooperative approach in parliament almost certainly accelerates disbursement of NextGenerationEU funds, a key lifeline for SMEs investing in digital upgrades.

Next Steps on the Parliamentary Calendar

The first-reading vote is scheduled for 29 October. Should PS ultimately abstain, the document advances to committee, where more than 1,200 amendment proposals are expected. The final plenary vote must occur by 28 November so the President can promulgate the law before year-end. Carneiro insists that his support is “not a blank cheque” and hints that approval at the final stage will depend on concrete concessions: safeguarding the extraordinary energy-subsidy scheme for low-income households and tightening oversight of public-private partnerships. Whether those demands will be met—and whether the PS leadership will unite behind them—now becomes the central drama of the autumn political season.