Western Europe’s poorest country is about to oust its government over immigration
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Lauren Clark loves life in Lisbon. The 32-year-old Briton credits moving to Portugal five years ago with allowing her to build up a successful career as a freelance wellness and lifestyle writer.
“The lifestyle is definitely the main drawing point, for sure. The food is amazing. Obviously, the weather’s gorgeous. It’s very easy to make friends,” she says.
“I go to a really lovely co-working space where there’s lots of new faces. You get that kind of social interaction that I would perhaps not have had so much in London where co-working spaces are too expensive.”
Portugal, Western Europe’s poorest country, has welcomed “digital nomads” like Clark and the rich in the wake of the pandemic, hoping to make money from remote work and free-spending expats. The number of foreigners living in Portugal has doubled in five years, hitting a record 1m in 2023.
However, this wave of well-heeled immigrants has sparked a public backlash. Living and housing costs have surged.
Now, Portugal is likely headed for its third snap election in three years. The minority centre-Right government is on the brink of collapse over corruption charges.
In part, this has been driven by the post-pandemic surge in tourism. However, observers say immigration has also played a key part.
“From an economic point of view, the increase in population and attraction of some well educated workers is certainly positive, particularly in a country like Portugal,” says Ricardo Amaro, a Portuguese economist who works at Oxford Economics.
“The number of inward migrants has increased quite significantly, and the number of outward migrants has stabilised at lower levels than during the global financial and sovereign debt crisis,” says Amaro. “That’s contributing to the solid population growth, which is quite surprising in the case of Portugal given the ageing population.”
The Portuguese population grew by around 123,000 people to 10.6m in 2023, according to the country’s official statistics office. An estimated 189,367 permanent immigrants entered Portugal that year, far more than the estimated 33,666 permanent emigrants.
The influx of new-comers is made up of many different groups: immigrants from poorer Portuguese speaking countries such as Brazil and Angola, wealthy European pensioners and digital nomads. The relative ease of getting citizenship after five years also makes it attractive for migrants who want to move elsewhere in the EU.
Population growth has spurred the economy. It grew by 1.9pc last year, vastly outpacing France, Germany and the UK. Meanwhile, real wages jumped 3.8pc.
However, the surge of immigration has coincided with rapidly rising house prices, interest rates and living costs. Rents in Lisbon rose by 43pc only from the end of 2021 to 2023, much faster than in many other European capitals. At its peak, inflation was jumping by 10pc a year. It means that despite growing wages, many people feel worse off.
Even Clark, who came to Lisbon before the post-pandemic surge in arrivals, has noticed the difference.
“The prices have just gone quite crazy with rents and property costing a lot,” she says. “What has also happened is that you have these brunch places that rather than sell an espresso for 50c that locals are used to offer Matcha lattes for €5 (£4.20). It has created a bit of a ghost town in the middle of Lisbon where there are not many locals anymore. Increasingly, it doesn’t feel as authentic.”
Amaro says of the recent immigration: “It does create a challenge for governments with discontent. Partly this is also what’s behind the rise of the far right, especially in a cost of living crisis.
“When you look at elections, we are now likely going for the third one in three years, and the main outcome of the previous two has been the quick rise of the far-Right.”
It is a story that will feel familiar in the US where Joe Biden’s was defeated by Donald Trump despite overseeing a booming economy. While there were a number of factors at play, high inflation was a key factor.
In Portugal, previous analysis has shown that the shift to the far-Right has been driven by people in deprived rural areas and young men coming out to vote. In the cities, the far-Left has also raged against digital nomads and tourism for driving up rents and bringing gentrification.
Portugal is the poorest country among Western European nations on a GDP per head basis. Its minimum wage is also below the EU average despite recent increases.
While many Portuguese are struggling, the government in Lisbon has rolled out the red carpet for wealthy foreigners. Examples include tax breaks and golden visas, which have become the target of public outrage.
For foreigners like Clark, the growing discontent over immigration is noticeable.
“I do feel that kind of hostility. It is this really tricky situation. A lot of Portuguese people are struggling. There has been a lot more tension.”
Charlie Baron, who manages three co-working spaces in Lisbon, has also noticed a change. “It has definitely got harder in the past 12 months for new nomads to find their footing – there is a bit more of a clampdown,” he says.
“It used to be one of the cheapest places to be a digital nomad in the world but now places like Thailand are very competitive. Over the last three years rents have gone up about 50pc – for a one bed it is now around €1,000 or maybe €500 to share a place.”
He believes locals are more concerned about illegal immigration. Still, tensions over immigrants – rich or poor – are unlikely to go away anytime soon despite Portugal’s booming economy. As the country heads to the polls once more, immigration and its impact on the cost of living is the issue on everyone’s lips.
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