Thousands of Portuguese took to the streets of Lisbon on Saturday in a new protest against government financial policies expected to get even tougher to meet pledges to creditors.
Marchers converged from several directions on the central Praca do Comercio square at the call of the main CGTP trade union body to demonstrate against "the theft of wages and pensions."
Finance Minister Vitor Gaspar has indicated the government will announce new measures including spending cuts and capital tax hikes to meet deficit targets that are key for Portugal to receive more funds under a bailout worth 78 billion euros ($101.5 billion) from international lenders.
The new tax hikes are expected to bridge a two billion euro gap in planned savings after the constitutional court ruled against a move to cut civil servants' 13th and 14th month pay.
The call was backed by popular "indignant" and other movements, including a group claiming to be apolitical which succeeded in mobilising hundreds of thousands of people in some 30 towns and cities two weeks ago.
Demonstrators blew on whistles and beat drums as they shouted "Down with austerity" and waved the flags of unions representing local government workers, teachers and even police.
"Our future is being mortgaged by the demands of the troika," 56-year-old government employee Francisco Lopes said, referring to the European Union, the European Central Bank and the International Monetary Fund providing the bailout.
"The Portuguese people are fed up with it."
Lopes, demonstrating for the first time, was accompanied by his son Rui, 27.
"I'm very worried, we're in a never-ending spiral and I don't see how my generation can have work, a home or a family," the younger man said.
Unemployed textile workers Maria Jose Oliveira and her husband who had come by bus from Braga in the northwest, also said it was their first demonstration since the 1974 revolution that overthrew the Salazar dictatorship.
Prime Minister Pedro Passos Coelho's government met Wednesday to examine proposals to raise taxes in place of enacting painful wage cuts.
A plan to slash take home pay, through a rise in employees' social charges from 11 to 18 percent while cutting employers' contributions to 18 percent from 23.75 percent, had to be abandoned because of fierce opposition across the country.
Instead, the government is now looking at a rise in revenue tax as well as introducing new taxes on capital and assets.
The new measures would still have to be approved by the troika.
The cabinet met in a seven hour session after which it released a statement saying that "the government has begun detailing its budget proposal for 2013... which would be presented to parliament" before October 15.
Spending cuts and economic reforms have caused a recession, with the economy shrinking by 1.2 percent in the second quarter, much faster than the 0.1 percent rate in the first quarter.
The contraction is expected to reach 3.0 percent for the whole year.