Portugal's opposition Socialists won their first outright majority in parliament since the country returned to democracy in 1974 in a snap election held Sunday, an exit poll showed.
Leader of the Socialists, Socrates, left is all smiles
The party was set to win between 124 to 136 of the assembly's 230 seats, compared to between 62 to 70 for Prime Minister Pedro Santana Lopes' Social Democrats who have been in office since 2002, the Catholic University poll forecast.
The Socialists, led since September by pro-market former environment minister Jose Socrates, have vowed to fight sluggish economic growth and a rapid rise in unemployment by moving Portugal from low-skill industries to more technology-based activities.
Portuguese leader of the Socialist Party Jose Socrates looks at photographers while casting his ballot
An admirer of British Prime Minister Tony Blair, Socrates also wants to reduce the size of nation's bloated civil service by 75,000 workers through attrition and hold a fresh referendum on the Roman Catholic country's strict laws against abortion.
The Socialists, who have alternated in power with the Social Democrats since the end of a right-wing dictatorship in 1974, blamed the rise in joblessness on the government's economic policies and more recently, on a lack of leadership by Santana Lopes.
As the number two in the party, Santana Lopes took over from Jose Manuel Barroso in July when he quit to become the head of the European Commission, the EU executive body.
Economy the prime concern
The Social Democrats have governed in a coalition with the smaller, right-wing Popular Party which ran alone in the elections. Under their watch the unemployment rate rose to 7.1 percent in the last quarter of 2004, its highest level since 1998, from just over four percent at the end of 2001.
Portuguese Prime Minister and leader of the Social Democratic Party Pedro Santana Lopes, left, waits for his turn to cast his ballot
The rise in the number of people seeking work exposed fundamental flaws in Portugal's economy, fueling concerns that the nation of just over 10 million people located on the westernmost edge of Europe is falling behind its fellow European Union members.
Portugal's per capita gross domestic product, calculated on purchasing power parity, fell to 74 percent of the average for the entire 25-member EU in 2003 from a peak of 77 percent reached in 1999, EU statistics office Eurostat said in December.
Fully 94 percent of all Portuguese feel the economic situation in their country is "bad", the worst rating of all in the entire 25-member EU, a Euro barometer survey released earlier this month showed.
Lopes suffers from lack of credibility
Voters were also concerned over the continued poor state of public services. A recent flu outbreak overwhelmed hospitals while courts have over one million backlogged cases even as the public wage bill consumes 15 percent of gross domestic product.
Portuguese Prime Minister and Social Democratic Party leader Pedro Santana Lopes
Polls taken during the campaign showed voters felt Socrates, 47, is more trustworthy and competent than Santana Lopes, whose plans to raise pensions and public sector wages, as well as slash income taxes, this year was dismissed as populism by economists and even senior members of his own party.
President Jorge Sampaio, a Socialist who had resisted calls for a fresh vote when Barroso stepped down, called the early vote in December, arguing the government lacked credibility following a series of gaffes. An election had not been expected until 2006.
Santana Lopes' brief tenure was marked by the resignation of a minister just days after he joined the cabinet, a delay of one month in the start of the school year because teachers were not assigned to their posts on time, and a downgrading of the credit outlook given Portugal by Standard and Poor's.