Portugal’s acting prime minister, Pedro Passos Coelho, failed to win the backing of the opposition Socialists yesterday for a new centre-right government, raising political uncertainty that could threaten a nascent economic recovery.

Mr Passos Coelho had invited Socialist leader Antonio Costa to the three-hour meeting after his coalition won the most votes in an election but failed to win a majority in parliament.

Protracted political wrangling now could undermine the economy’s revival after three years of recession induced by harsh cuts and tax hikes under an international bailout that Lisbon completed last year.

With the Socialists declining to join his government, the most Mr Passos Coelho can hope for from them is periodic support for key legislation like the 2016 budget. It is enough for the Socialists to abstain for that to happen.

Another option, made possible by far-left election gains, would be a left-wing majority government led by the Socialists.

Mr Costa’s party gave him a mandate to talk to both the left and the right after the election. But while the chance of a left-wing government rolling back the painful changes made under the bailout are slim, analysts have warned that a long-drawn-out stalemate in forming a government could also hold back economic growth.

Both Passos Coelho and Mr Costa said neither presented any proposals at their first meeting after the election, although they did agree to meet again on Tuesday.

Just an agreement by the Socialists to abstain from votes in parliament would be enough for Passos Coelho to get legislation passed and govern.

“We are open to all solutions,” as long as the country sticks to European Union budget rules and brings the budget deficit to below three per cent of gross domestic product, Mr Passos Coelho said.

Mr Costa wants to return more disposable income to families but has said that he respects European budget rules.