When Fernando Teixeira dos Santos joined the Socialist government as finance minister in July 2005, Portugal was mired in pessimism, economic growth was close to zero and the threat of European Union sanctions hung over a country that had allowed its budget deficit to soar out of control.

Less than three years on, he was able to announce in March a record cut in the deficit – from 6.1 per cent of gross domestic product in 2005 to 2.6 per cent in 2007 – bringing Portugal below the 3 per cent maximum allowed under the EU’s stability and growth pact a year ahead of schedule.