President Anibal Cavaco Silva announced yesterday that Portugal would hold early general elections on June 5, after the struggling eurozone member hit a political impasse over austerity measures.

“I have decided today to accept the resignation which was handed to me by the Prime Minister and to call legislative elections for June 5,” he told reporters.

The decision comes eight days after Socialist Prime Minister José Socrates resigned when the parliament rejected a new austerity programme put forward by his minority government.

“This election will take place at a critical moment for the life of the country.”

As provided for by the Portuguese constitution, the president had already consulted all the political parties represented in the assembly who were unanimous in favouring early legislative elections.

Since the political crisis broke Portugal has been under growing pressure from the financial markets and the ratings agencies, worried about the solvency of the country.

Although the cost of borrowing has risen Mr Socrates has continued to rule out seeking external aid, as Greece and Ireland were forced to last year.

The caretaker government does not have the right to negotiate an international bailout for the country’s ailing economy, Finance Minister Fernando Teixeira dos Santos said earlier.

“This government does not have the legitimacy, nor the conditions to negotiate in this way,” the minister told a press conference as Lisbon.

Mr Teixeira dos Santos was speaking after the release of official figures showing that Portugal’s public deficit stood at 8.6 per cent of Gross Domestic Product last year, well above the 7.3 per cent government objective.

An opinion poll last week suggested that the centre right could win an absolute majority in an election with 46.7 per cent of the vote against the Socialists’ 24.5 per cent.