The Portuguese elections may result in a gridlocked government. The center-right coalition won – but did not secure a working majority. The incumbents gained 37% of the votes, the Socialists 32%. The Left bloc reached 10% and the Communists, who were expected to win double figures, got 8 %.

With 99 seats in a 230-seat parliament, however, the ruling coalition fell 17 seats short of the needed majority.

As Paul Ames writes on

Without an agreement between the two main factions, Portugal could face a period of political uncertainty as the government struggles to push through its program and get next year’s budget through parliament.

The Portuguese elections can therefore be both a factor helping to secure a more stable political scenario in the Eurozone–or, paradoxically, further endanger it. It has already been remarked that the political extremists had no chance to win in Portugal: the contest was basically between “mainstream” parties, both committed to fiscal consolidation. But it is also noteworthy that the governing coalition, which implemented tough austerity measures, regained consensus: just a few months ago (see the chart in this article) the Socialists were rising in the polls.

I don’t know enough about Portuguese politics to speculate whether incumbent Prime Minister Pedro Passos Coelho will be able to form a minority government and gain support in the Parliament. Somehow he is in a position similar to Angela Merkel after the last elections. Merkel won even more unequivocally, but lacked a proper majority, and thus needed to ally with the social-democrats.

Political instability in Portugal can hardly be good for the rest of the Eurozone. After Portugal and Greece, the third election to watch out for will take place in Spain. Here, political extremism has been on the rise for quite a while, with the left-wing populists of Podemos gaining consensus, not least because of a huge corruption scandal. The way in which these three countries manage to deal with fiscal consolidation and, hopefully, return to growth in the next few year will be crucial for the future of the Eurozone.