Portugal’s socialist government is achieving “historic” spending cuts that will put an end to a long history of budget crises, the country’s prime minister has claimed.

José Sócrates said in next year’s budget public spending, excluding interest payments, would be cut by 1 percentage point of gross domestic product, bringing the state’s overall share of the economy to 42.4 per cent. This would follow on a 1.6 percentage point cut this year which would reduce the level of public spending to 43.4 per cent of GDP.