This page was written in 2007 and we keep it as a record of that moment, corrected and completed with an account of what happened next. For the current situation see the page on the Portuguese economy.
Portugal in 2007
To describe modern Portugal one could start with Lisbon, poised between the slow pace of life in the old quarters and the fast pace of the globalised present: a beautiful, somewhat faded city, with many problems but also many hopes.
The minimum wage was among the lowest in Western Europe, just over 400 euros a month, and precarious work was widespread. Unemployment was around 8%, while industrial competitiveness and entrepreneurial spirit remained weak. The improvements of previous years could be felt, but Portugal was still seen as the "Cinderella of Europe".
Grounds for hope came from the measures of the Socialist Prime Minister José Sócrates, in office since 2005, who at the cost of unpopularity and a wave of strikes had launched a series of reforms: cutting the costs of public administration, reforming primary schools, legalising abortion, approved in a referendum in February 2007, raising VAT from 19% to 21%, liberalisation and above all reining in the public deficit, down from over 6% of GDP in 2005 to about 3% in 2007.
The focus was on reducing public administration costs, but also on mobility and merit for civil servants. English had been introduced in primary schools and the Novas Oportunidades programme tried to bring back to school adults who had not finished their studies. Investment was planned in logistics, infrastructure, renewable energy and communications, along with two major projects: the Lisbon-Madrid high-speed train and the new Lisbon airport. Big groups such as Nokia Siemens and Cisco were opening centres in Portugal, and thanks to its historical ties with Brazil and Portuguese-speaking Africa the country could become a bridge between them and Europe. The problem remained of finding the resources to continue, while deficit control limited investment.
We concluded at the time that if the country managed to shake off the memory of recent decline, it might see, as Spain had, an economic, political and cultural revival. The outcome was uncertain.
What happened next
The uncertainty was resolved in the harshest way. The 2008 financial crisis and the sovereign debt crisis hit Portugal hard: in 2011 the Sócrates government resigned and the country had to ask for a 78-billion-euro international bailout, followed by years of austerity, as told on the page on the economic crisis. The Lisbon-Madrid high-speed line was suspended in 2012 and revived only many years later, with the Lisbon-Porto line under construction and the link to Spain via Évora and Badajoz; the new airport was also postponed several times, and only in 2024 did the government finally choose the Alcochete area, east of the Tagus, for the future airport.
The most optimistic forecast did partly come true, though: after 2014 Portugal returned to growth, tourism boomed, Lisbon became one of Europe's most attractive capitals for young people, tech companies and investors, and the public accounts moved from deficit to surplus. The minimum wage, just over 400 euros in 2007, reached 920 euros in 2026, although housing costs have risen even faster.