In the autumn forecasts released by Brussels, an analysis is made of the impact of EU funds, which “should vary significantly between Member States”, with Portugal being one of the main beneficiaries.
“In the EU as a whole, public spending financed by EU grants is expected to increase by 0.2% of Gross Domestic Product (GDP) between 2024 and 2026. However, an increase of more than 1% of GDP is expected in Bulgaria, Greece, Latvia, Poland, Portugal and Slovakia,” the document states.
However, following these increases, there is a decrease between 2026 and 2027, which “is influenced by the relative size of the respective allocations from the Recovery and Resilience Plan (RRP) and the cohesion policies of the Member States,” so that some countries “with larger RRP allocations (such as Greece, Portugal and Spain) are expected to register larger falls in spending financed by EU grants in 2027.”
Brussels also concludes that fiscal policies will be considerably heterogeneous among Member States in 2026, ranging from a contractionary policy of around 3% of GDP in Romania to an expansionary policy of around 3% in Estonia.
“Expenditure financed by PRR grants and other EU funds should provide considerable expansionary contributions to fiscal policy in Bulgaria, Portugal, Poland and Greece,” the Commission considers, in a document where it predicts that Portugal will register a zero budget balance this year and a deficit of 0.3% in 2026.
These forecasts are more pessimistic than those of the government, which points to a surplus of 0.3% of GDP this year and 0.1% in 2026.
The Commission highlights that “domestically financed investment should continue or increase in most countries, with a particularly large expansion in Estonia and Lithuania, also due to defense spending.”
On the other hand, “net current expenditure financed by national budgets is expected to contribute to contraction in ten EU countries, with major restrictions in France, Malta, Austria, Finland, Poland and especially Slovakia and Romania,” the Commission concludes.
Brussels also analyzed the impact of US tariffs, concluding that Portugal is among the countries with the least exposure to these rates.
“Malta, Croatia, Estonia, Portugal and France are less exposed because they have low effective tariff rates and limited exports to the US,” the document says.
Effective tariff rates vary considerably among Member States, from 3.2% for Ireland to 29.5% for Luxembourg, depending on the products that the countries export most.
“Countries whose main exports are steel, aluminum, iron, medium and heavy vehicles, and machinery face the highest rates, while countries that primarily export goods that are currently exempt from US tariffs, such as aircraft and pharmaceuticals, are at the lower end of the ranking,” the Commission explains.