No, it’s not about Mousakka or Cozido... The Portuguese Parliament has finally approved a draft for austerity measures to be put into effect to stop the country from edging closer to the need for a bailout.

Portugal’s fate was seemingly hanging in the balance as its costs to trade in bonds and to obtain loans were skyrocketing due to market fears about the state of its economy.

Under Prime Minister Joao Socrates, the Portuguese Parliament has hammered out austerity deals that are aiming to slash the country’s deficit from 9.3% of GDP in 2009 to 4.6 per cent in 2011. It currently stands at some 7.3%.

Europe has backed this bill, but it was not easy. Although Portugal faced the very real and imminent threat of default, opposition parties blocked the deal on more than one occasion. In fact, Socrates had to sacrifice some €500 million in tax revenues to get consensus.

In comments to the media, Socrates said that Portugal does not need EU help and can solve its problems on its own – he said that Portugal needed the markets to understand that the government was doing its job in driving the deficit down and that this should lead to more market security and better bond spreads and interest rates.

Whether Portugal – still seen as one of the more backward EU members – can deliver on its promise is another thing entirely. It has a paralytic parliamentary setup and is notorious for countermanding previous decisions.

Greece, thousands of miles away, but still part of the EU bloc, is facing yet more trouble. In the wake of the failed parcel bomb attempts last week, Prime Minister George Papandreou has promised a snap election if his party does not win the upcoming regional elections.

The Greeks are in deep trouble. This year, the economy is expected to contract by some 4% and in addition, contraction for next year has been revised to 3%, up from 2.6% – the original estimate.

Meanwhile, Greece has been granted some respite by the European Commission. The country’s deficit figures, heavily revised for 2009 by the commission itself, are not going to be published until after the local elections.

Greece had planned to cut its deficit to something in the region of 7.8 to 8% by the end of this year, but this is not looking likely with a deteriorating financial situation. Experts have predicted that despite the bailouts and loans provided to Greece, its deficit is likely to hit 15% of GDP, in turn swelling its already bloated public debt to 127% of GDP from 115%.

Greece and Papandreou are in dire straits. That being said, while his government’s support ratings are at their lowest ebb, they are still higher than those of his conservative rivals – the ones responsible for getting Greece (and in turn the Eurozone) into the mess that there is today.

Greek governments find it hard enough to actually get moving in the best of times. But with protests, mail bombings and a potential snap election, things would only get worse. One has to wonder, will a regional loss be the final straw for Papandreou? Or is it merely a form of political posturing to ‘scare’ the electorate. Time will tell. The polls are on 14 November… Europe will wait with bated breath.