Portugal Announces New Austerity Measures

May 14, 2010 Updated: May 14, 2010

Portugal is imposing new austerity measures to cut the nation's fiscal budget deficit in an effort to calm the financial markets. The country is the fourth in the eurozone to tighten its budget to try and rein in the ongoing European debt market turmoil.

Portugal Prime Minister Jose Socrates hopes to cut the deficit by another 1 percent of GDP to 7.3 percent.

The measures include a 21 percent increase in VAT tax, higher personal income taxes, and a host of corporate tax increases.

Fiscal conservative opposition leader Paul Portas called the drastic steps a “fiscal bombardment of the economy,” according to a report in the U.K. Telegraph.

So far, Greece, Spain, and Portugal have announced fiscal austerity measures in efforts to stabilize the euro economy.