Portugal’s 2026 Budget Advances—Caregiver Pay, Tax Cuts and Mortgage Relief

For anyone trying to guess how 2026 will feel in their wallet, the vote just taken in São Bento offers an early outline: the centre-right coalition led by PSD and CDS-PP has nudged its first budget through the general vote, clearing the way for weeks of line-by-line haggling that could still reshape the text but is unlikely to topple it.

First hurdle cleared, but the arithmetic stays fragile

A minority cabinet rarely has the luxury of easy victories, yet on 28 October the Government persuaded enough deputies to stand aside. The Socialists, PAN and the island-based JPP abstained, allowing the proposal to pass despite solid rejection by Chega, IL, BE, PCP and Livre. In practice the result confirms two facts: PSD/CDS-PP retain just enough goodwill to keep governing, and the Opposition spectrum is too fragmented to present a single alternative. Behind the voting board lay intense back-channel talks in which the PS leadership signalled an "exigent abstention"—a tactical move meant to project responsibility without endorsing a budget they denounce as "low-octane" in social ambition.

What the €122 B blueprint actually promises

Inside the thick stack of documents, the Government sketches economic growth of 2.3 %, a symbolic 0.1 % surplus, and a debt ratio sliding beneath 88 % of GDP. Flagship health items include full wage replacement for parents caring for children with cancer, a push for 65 % market share of generic medicines, and a fresh wave of hospital equipment purchases—most visibly €3 M earmarked for the Hospital de Santo Espírito in Terceira. On pensions, the right-of-centre benches added a clause enabling an extraordinary supplement next year if revenue keeps over-performing. Education receives a backstop that lets the Treasury shift funds to municipalities repairing schools, whereas in security, parliament has already overridden the cabinet to boost the patrol allowance for GNR and PSP officers.

Committee stage: where abstainers flex their muscles

Debate in the specialty round began on 20 November and within twenty-four hours produced the first upset: a Socialist motion raising the patrol bonus sailed through even though the coalition voted no. The episode foreshadows how PS and smaller parties can rewrite individual articles while still refraining from an outright blockade. PAN pushed through an adjustment of overseas allowances for diplomats, and even managed to fold victims of domestic violence into the Porta 65+ housing scheme. JPP, advocating Madeira-centric corrections such as a mobility guarantee fund for air travel, left the room empty-handed on day one but vows to return before the final vote on 27 November.

Economists looking in from Brussels, Paris and Washington

Independent forecasters are politely sceptical. The European Commission and the OECD both pencil in a small deficit of about 0.3 % by 2026, warning that salary hikes and tax cuts may erode the thin surplus the Government advertises. The Bank of Portugal is gloomier still, foreseeing a 1.3 % gap if "pro-cyclical" policies persist. Only the IMF gives Lisbon the benefit of the doubt, flirting with a balance close to zero while cautioning that the cushion could vanish the moment growth slows. All four institutions nevertheless project the debt ratio continuing its downward drift, a prerequisite for Portugal to maintain access to cheaper borrowing costs on the international market.

Why households should pay attention now, not in January

For families in Porto or Faro, the details hammered out this month decide whether a cancer-stricken child’s caretaker receives full pay, whether fuel taxes inch downward, and whether the mortgage credit can still be offset against IRS. Employers monitoring cash-flow will watch the promised exemptions on autonomous corporate taxes for start-ups, while pensioners weigh the prospect of that extraordinary uplift tied to revenue performance. The headlines may focus on parliamentary theatre, yet the fine print settling in committee over the next five days will set the tone for salaries, tuition fees and even airfare between mainland and islands.

The road to 27 November

Unless a last-minute revolt arises, the coalition expects to lock in support from its own benches and count once more on strategic abstentions to see the budget across the finishing line. Opposition parties are preparing dozens of final-hour amendments, though most privately admit the fundamental architecture will stand. From that date, the document heads to Belém for promulgation and, barring surprises, enters the Diário da República before Christmas—giving taxpayers and businesses a brief window to decode the law before it takes effect on New Year’s Day.