Portugal is set to return the Socialist Government to power despite the country suffering one of the worst economic downturns in 20 years.
As polls closed last night, José Sócrates, the Portuguese Prime Minister, looked likely to win the parliamentary elections but with the loss of the Socialists' absolute majority.
With more than 98 per cent of the votes counted, the Socialists were on 38 per cent, against the 29 per cent for the opposition centre-right Socialist Democratic Party (PSD).
Mr Sócrates's Government would be only the second socialist administration in Europe, after Norway, to be returned in the midst of the global economic recession.
A minority Socialist government will have to form alliances with smaller parties such as the Left Bloc, a left-wing party, or the Communists to maintain power.
With unemployment standing at 9.1 per cent — a 22-year high — many Portuguese appear to have to turned to left-wing parties, splitting the vote on the Left.
Though the election was to select MPs for the country's single 230-seat parliament, it has largely been a personal battle between Mr Sócrates and his right-wing rival, Manuela Ferreira Leite.
Mr Sócrates, 52, who won a majority in the last elections in 2005, promised major public works such as a high-speed rail link and a new airport to create jobs.
Mrs Ferreira opposed large-scale public works, claiming that the country could not afford them.
The 68-year-old, who is known as a tough cost-cutter, also threatened to scrap a high-speed rail link between Lisbon and Madrid, saying that Portugal "was not a region of Spain".
Instead, the PSD promised voters tax breaks to stimulate private enterprise.
Mrs Ferreira, who has ambitions to be the country's first woman prime minister, failed to inspire, said analysts.*
"By focusing her entire strategy on criticism of the Government without proposing alternatives, Ferreira failed to excite the electorate," António Costa Pinto, a Lisbon politics professor, said.
However, just getting voters to the booths was the biggest problem facing both parties. In the last general election in 2005, 35 per cent of the electorate did not bother to turn out. By 1pm yesterday, only 21 per cent had voted.
"This is the day of the people and I am convinced are going to vote," Mr Sócrates said.
The Socialist leader convinced the likes of Filipa Pinto, 47, a Lisbon housewife.
"I don't agree with everything they've done but [Sócrates] was brave and has changed things that others daren't," she said.
Mr Sócrates faces a tough second term.
The Portuguese economy shrank 3.7 per cent in the second quarter compared with the same period last year.
The country, of 9.4 million, remains the poorest in Western Europe with an average monthly salary of €600 (£550).**
Productivity remains low in part because of antiquated labour laws brought in after the Crimson Revolution*** in 1974. The current deficit is 5.9 per cent of GDP, above EU guidelines.
During the past four years Mr Sócrates has raised civil service retirement age from 60 to 65 and introduced an evaluation scheme for teachers.
Under the Socialists, Portugal has pioneered clean energy development and electric cars.****
However, Mrs Ferreira said that economic reforms must go deeper.
Analysts said that a reduced majority would make it harder for Mr Sócrates to carry out big reforms.
* the late Maria de Lourdes Pintasilgo (1930-2004) was our first woman Prime-Minister, and the second one at the time in any European Country, so there! :)
** Sad but true, or just plain sad?
*** Crimson is the 2008 Tibetan uprising in China, ours is The Carnation Revolution.
**** Where? Where?
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