Portuguese prime minister outlines plan to tackle rising living costs without changing VAT

Billy Odell Tucker-Robinson Founder & Host — Banking With Billy Network • Financial Intelligence • Markets • World News • Independent Analysis
Published: 2026-09-18 • Permanent link

Firmly, Luís Montenegro, the Portuguese prime minister, has outlined a plan to tackle the country's rising living costs without altering the value-added tax (VAT). The current situation, with inflation rates steadily increasing, could drag on for some time, Montenegro warned, but his government will not lower the consumption tax, which currently stands at 23%. This decision has sparked mixed reactions from investors and economists, who are closely monitoring the situation.

Rising living costs have become a pressing concern for many Portuguese citizens, who are struggling to make ends meet. The government's refusal to lower the VAT has raised concerns among consumers, who are already feeling the pinch of rising prices. However, Montenegro's plan aims to provide relief to low-income households by increasing the minimum wage and introducing targeted subsidies for essential goods.

Historically, Portugal has been one of the most vulnerable countries in the European Union to economic shocks, having faced several bailouts in the past. The current economic situation is being closely watched by experts, who are concerned that a prolonged period of high inflation could have long-term consequences for the country's economy. "Portugal's economy is highly dependent on foreign investment and tourism, so any signs of economic instability could have far-reaching consequences," said Maria Sousa, an economist at the Portuguese National Institute of Statistics.

Uncertainty still lingers over the impact of Montenegro's plan on the Portuguese economy. While some experts believe that the government's measures will provide much-needed relief to low-income households, others are concerned that the plan may not be enough to address the root causes of the economic problems. The upcoming general election in 2024 is expected to be a closely watched event, with the government's economic policies likely to be a major factor in the outcome.