Portugal's Socialist party is poised to form a left-wing governing alliance with the eurosceptic radical Left in a bid to become the country's new government.
Following an election stalemate in which the opposition Socialists came in second place to the incumbent conservatives, leader Antonio Costa has said he is ready to strike up an alliance to become the country's new prime minister.
The eurosceptic Left Bloc and Communist Party both received 10.2pc and 8.3pc of the national vote share respectively. However, Mr Costa has affirmed that he will only head up an alliance that would pursue policies that will keep the country in the euro, four years after it received an €78bn international bail-out.
"Although the negotiations are obviously still underway, at this moment, everything indicates that the Socialist Party is in better condition to be able to lead a more stable government solution,” said Mr Costa, a former mayor of Lisbon.
October's general election saw the ruling coalition of prime minister Pedro Passos Coelho lose its majority, despite coming in first place with 37pc of the vote. Mr Coelho's government had zealously implemented spending cuts and tax hikes as part of the country's bail-out deal.
Mr Costa had vowed not to provide parliamentary support for a conservative-led minority government, throwing Portugal's economic progress into doubt.
The political vacuum has seen already seen Portugal become the first eurozone country to fail to submit its draft budget plan to the European Commission.
Portugal's former creditors, including the International Monetary Fund, have urged any new government to stick to the path of austerity and structural reforms in order to return the economy back to health.
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