Portugal crisis sounds death knell for independent shops

Once among the most sought after real estate in Portugal, Lisbon’s historic Baixa neighbourhood is now full of dusty shuttered shops that have folded amid the unprecedented economic crisis plaguing the country.

“Small businesses were already on the way to extinction, but this crisis has dealt them the death blow,” said Manuel Soares Pereira, 70, who owns a menswear store that was founded by his father in 1942.

“Fanqueiros street was the biggest commercial centre of the country… but now we are in agony,” said his wife Angela behind the counter, where several old dressmaking instruments were displayed.

She was referring to one of the main streets in Baixa which runs towards the Portuguese capital’s waterfront.

Once Lisbon’s main shopping district, today the street is full of shuttered shops and budget clothing chains which are popular with tourists.

Plastered with posters depicting another era’s fashion, Pereira’s shop bears witness that its best years are over.

“Our sales plunged 30 percent last year and this year we will suffer a drop of the same degree,” said the engineer who retired five years ago to try and save the family business.

“Consumption is plunging, even that of the well-off. Everyone is worried,” he added.

“But if I don’t sell more, I can’t buy more and then the suppliers would suffer. It’s a vicious cycle that will destroy our economy,” said Pereira.

Portugal’s economy has deteriorated amid successive austerity plans adopted since 2010.

After Greece and Ireland in 2010, it became the third eurozone member state to need a bailout in May when it could no longer raise funds at sustainable rates on financial markets.

In return for a 78 billion euro ($102-billion) loan, it agreed to cut its public deficit from 9.8 percent of gross domestic product in 2010 to 4.5 percent by the end of 2012.

Hurt by the cuts, the country slumped into a recession, with output down 1.6 percent and projected to shrink further this year by 3.1 percent.

According to the Bank of Portugal, consumption will tumble 11 percent over the period from 2011 to 2013 as tax hikes, public sector salary cuts and social security cuts bite into household budgets.

In fact, since September Portugal has been posting the biggest drops in retail revenues among European Union states. Eurostat data show that sales fell 9.2 percent in November from the same month a year earlier.

“The Christmas period was the worst of the last 10 or 15 years,” said Adolfo Antonio, who has been working in a household draperies store called Ramos for over four decades.

The 55-year-old said he has “no prospects.”

“All that I am expecting is to retire. Sooner or later, the shop will close,” said Antonio, who has not had a wage rise in the last 20 years.

“Before the euro, I was well paid. Now I am just surviving,” added the salesman who is among many disappointed with the single European currency.