Portugal’s government on brink of collapse

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Portugal’s centre-right government is on the brink of collapse as Prime Minister Luís Montenegro faces a confidence vote on Tuesday triggered by a scandal over his family business.

His defeat is likely to lead to Portugal’s third election in less than four years as the government faces pressure to boost defence spending and is roiled by a rise in anti-immigrant sentiment that has energised the far-right.

Montenegro, who has led a fragile minority government for 11 months, has been engulfed in a storm over his alleged failure to divest his stake in a consultancy he founded.

The saga has reinforced public perceptions of widespread corruption in Portuguese politics, where previous premiers faced accusations of graft.

Montenegro, head of the Democratic Alliance party, set up a firm called Spinumviva in 2021 when he was out of politics. But he was put on the defensive by revelations that he had transferred ownership of it to his wife and sons in 2022 — a move critics said was invalid because, under Portuguese law, married couples are the common owners of all assets acquired after they wed.

Socialist opposition leader Pedro Nuno Santos has accused Montenegro of “receiving payments from companies” while prime minister because Spinumviva’s clients continued to pay the consultancy.

When the Socialists threatened to set up a parliamentary enquiry into the affair last week, Montenegro said “the country needs political clarification” and announced he would submit his government to a confidence vote.

Montenegro continues to accuse the opposition of stirring controversy and insists he has done nothing wrong.

Paula Espírito Santo, a political-science professor at the University of Lisbon, said Montenegro had handled things badly by not selling or closing down the consultancy when he became party leader in 2022.

In recent weeks, she said: “He had the option of trying to clarify everything, but he did not and it has snowballed . . . He has not been ahead of events. He is reacting to events.”

Last week, Montenegro’s wife transferred her shares in the company to the couple’s adult children.

A lawyer by training, Montenegro has said he will lead the AD into any new election, which the country’s president has said would take place in May.

The AD is polling down two percentage points from late February but still marginally ahead of the Socialist party, with 33.5 per cent of the vote versus 28.8 per cent, according to a CNN Portugal poll conducted last week as the scandal intensified.

A new government will face immediate pressure to boost defence spending as US President Donald Trump rails against Nato members not paying their fair share. Portugal spent about 1.6 per cent of GDP on defence last year, short of Nato’s 2 per cent target that is set to be raised. Trump has said he wants to raise the target to 5 per cent.

The AD’s struggle to attain a parliamentary majority has been due in large part to the rise of Chega, a far-right party capitalising on discontent over immigration and corruption. Both Chega and the Socialists are expected to vote to oust Montenegro in the confidence motion.

Montenegro ruled out working with Chega while in office and his lack of a parliamentary majority meant he was unable to implement significant reforms. He passed some tax cuts with the support of the Socialists and had a 2025 budget approved because the Socialists abstained.

Portugal’s previous prime minister António Costa, now president of the EU Council, resigned in 2023 over a lobbying scandal that is still being probed by prosecutors, although he has not been accused of misconduct. José Sócrates, premier from 2005-2011, is awaiting trial on charges of money laundering and falsifying documents. Both men deny wrongdoing.