These six graphs explain what’s affecting the upcoming Portuguese elections

Joshua Tucker: Continuing our series of Monkey Cage Election Reports, we are pleased to present the following pre-election report on the October 2015 Portuguese parliamentary elections from political scientist Pedro Magalhães of ICS-ULisbon.

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The next parliamentary elections in Portugal will take place on Sunday, Oct. 4, four years and three months after the previous triumph of the center-right Social Democratic Party (PSD), which was followed by the formation of a majority coalition with the Social Democratic Center (CDS). Like other countries in Europe, Portugal went through a “troika” (European Central Bank, European Commission, International Monetary Fund) bailout, in the aftermath of the sovereign debt crisis, the conditions of which involved adopting austerity policies.

The latest polls at the time of this writing, aggregated here (using a Kalman filter poll-aggregating technique), show the two government parties, now running in a pre-electoral coalition, leading with 38 percent. The main center-left party in the opposition, the Socialist Party (PS), is at the moment quite close (36 percent), in a statistical tie. To be sure, poll results typically change a bit in the last days of the campaign, and the recent U.K. polling debacle invites some caution (particularly on the issues related to turnout).

[How did the pollsters get the British elections so very wrong?]

In any case, these results have already been a source of perplexity in Portugal. If the current poll estimates stand, the incumbent parties stand to lose about one out of every four of the votes they got in 2011. It would be their second-worst result in Portuguese democratic history.

And yet the center-right coalition may still win the election. What has prevented its further downfall? And what has prevented the PS from capitalizing on it? I argue that a closer look austerity, at economic performance in the last two years, at how people have perceived it, and at the memory of the recent past may help solve this apparent puzzle.

1. Austerity

Some time ago Bloomberg ran a piece by Alexander McIntyre on “how much austerity has Europe actually endured,” resorting to the common measure of looking at the changes in the structural balance (deficit adjusted for the cyclical component). Here’s a neat graph from that piece.

Structural balance as a percentage of GDP.
Data: IMF; Figure: Alexander McIntyre
Data: IMF; Figure: Alexander McIntyre

For Portugal, you see the start of fiscal tightening from 2009 to 2011 (it had started already under the PS government), which then becomes steeper from 2011 to 2012. However, it levels off after that and, from 2014 to 2015, some fiscal loosening is forecasted (surprise!), in contrast with all other countries in the graph.

The IMF has been complaining, but Pedro Passos Coelho, the prime minister, argued “there is no reason to be as pessimistic about the numbers as the IMF.” After all, 2015 is an election year. In any case, the point is that characterizing this last legislative term as “four years of austerity,” as many have argued in Portuguese political commentary, is really not accurate.

2. A recessive spiral?

Early in the term, much was written about a possible “recessive spiral” resulting from the austerity policies adopted earlier in the term. However, this did not happen, and we can now see the political consequences. Figure 2 shows, on the left y-axis, the joint polling estimates for the two government parties (PSD and CDS, source here) since the 2011 election and, in the right y-axis, the monthly unemployment rate (source here):

The government coalition almost continuously loses support until September 2012, drops even more in the space of a few days (here’s why), reaches its lowest point by mid-2013 (and there was a political crisis around that time too), but, then, stability ensues. In other words, the coalition stopped bleeding about six months after unemployment started declining (recall that political economy models of popularity do love six-months lags).

If we look at GDP growth (Growth Rates of real GDP, change over previous quarter, source), we can see a similar story unfolding.

3. Economic perceptions.

Real economic data does not necessarily translate into economic perceptions. However, in Portugal, it did. This graph at the Public Opinion Portal shows the sample means for the survey response to the question “How would you judge the current situation of the Portuguese economy?,” from the Eurobarometer surveys (from 1, “very bad” to 4, “very good”).

And an even more encouraging story emerges when we look at consumer confidence (source here):

In fact, once you start looking at these trends, the question ceases being, “Why isn’t the government being punished more?” and becomes, “Why have the government parties failed to regain support?”

[What happens to the left when it gains party? Look at Greece’s Syriza party.]

It’s hard to give a definitive answer. Growth has been positive, but really very modest. The decrease in unemployment, although partially based in job creation, has also been come about because of emigration and precarious job security. Consumer confidence has increased and economic perceptions have improved, but on balance remain negative.

Passos Coelho and the leader of the junior coalition party, Paulo Portas, remain massively unpopular (not a single campaign poster in the country has their faces on it). PSD’s past electoral support has increasingly relied a lot on pensioners, but they were one of the major targets of harsh measures in the first half of the term. These and other things may matter. But the main point to emphasize is that, for the center-right government, while some punishment is forthcoming, we really shouldn’t be so surprised that it did not go any deeper.

4. The opposition Socialists

The main opposition party, the PS, has regained some ground since defeat in 2011, but seems still far from its best scores ever (above 40 percent in 1995, 1999, and 2005). The graph below shows their polling figures since 2011, compared to the center-right coalition’s popularity.

The PS made a slow and steady recovery, with a short break during their recent internal struggle for leadership after the European Parliament elections. But the largest margin over the government parties throughout the entire legislature was never above 3 (three) percentage points. Since mid-2013, their edge over the coalition has remained mostly trendless.

Why? On the one hand, their rise stopped about at the same time that the economy started giving positive (or less negative) signs. On the other hand, note the following: In our 2011 post-election survey, when asked about who they blamed for the economic crisis and the bailout, almost two out of every three voters (and almost one out of every two among PS identifiers) stated the PS government was “very” or “extremely” responsible.

Unfortunately, Portuguese media polls focus mostly on voting intentions and popularity and tend to give us very little substance on the fundamentals. But one wonders how much of this blame is still prevalent. A recent analysis of the U.K. elections shows “economic competence gaps” being built around pivotal events, lasting for a long time, and, in recent years, a gap opening in favor of the Conservatives after the economic crisis and expanding further with the first signs of recovery in 2013. It is possible that a similar phenomenon has created a “ceiling” to the Socialists’ electoral potential they have yet to overcome.

Summing up

The government parties are getting clobbered, but a modest economic recovery seems to have prevented their core support from being fundamentally undermined. They had a chance that other parties in Europe that led austerity drives did not (think the Socialists of PASOK in Greece): a cohesive parliamentary majority, a somewhat better and more tolerantly designed adjustment program (with less terrible starting conditions, of course), some of the harshest measures blocked by the Constitutional Court (arguably with positive economic effects), and quantitative easing from the ECB at the right time to allow them to have something to show for in terms of recovery by the end of the term.

True, the Socialists too have evaded the fate of other parties that were punished earlier over the Great Depression in Europe (think the Spanish center-left PSOE, today still below their already disastrous 2011 result).

However, they seem unable to fulfill what seemed to be their potential. To be fair, they did try to work on the economic competence problem, preparing an arguably serious economic policy platform, with the help of definitely serious people.

But here’s what may be the problem with “policy platforms” in Portugal these days. Austerity may have taught something to the electorates of the peripheral European countries: As Armingeon and Baccaro argue, although “democracy means that citizens choose among policy options, either directly or through their representatives,” “in the case of the sovereign debt crisis, however, there is no real choice either for country governments or for their citizens” (p. 256).

If the room to maneuver for parties in any government in a small and peripheral economy like Portugal’s is constrained, and if the real decisions are made in Brussels or Berlin, why would voters care about parties’ “policy platforms”? It’s visible performance, the recent past, and the fear of returning to the worst part of it, which seem to matter for voters. And there, things work as badly – and in some respects perhaps even worse – for the Socialists than they do for the Portuguese center-right.

Pedro Magalhães is a researcher at the Institute of Social Sciences (ICS) of the University of Lisbon.