Portuguese election set to return 'hung' parliament.

Portuguese voters go to the polls in two days in an election that may produce a minority government.

Prime Minister Jose Socrates’s Socialist Party led the Social Democrats of former Finance Minister Manuela Ferreira Leite 40 percent to 31.6 percent, in a poll yesterday by Diario Economico.

Socrates, 52, has pledged to step up public-works in Portugal spending on such projects as a 7.5 billion-euro ($11 billion) high-speed rail network to revive economic growth and create jobs. Ferreira Leite, 68, says the Portuguese people can’t afford such spending and will focus on smaller projects, cutting the debt.

The next government will inherit an economy that the Bank of Portugal says will shrink 3.5 percent this year and that has failed to achieve annual growth of 2 percent since 2001. The government forecasts a budget gap of 5.9 percent of gross domestic product, almost twice the European Union limit. Joblessness reached a 22-year-high 9.1 percent and is climbing.

Socrates’s efforts to control public spending, including raising the retirement age for civil servants and changing labor laws, cost him support with workers, the party’s base. His policies triggered various protests, including one that drew 100,000 Portuguese teachers, and he faced the country’s first general strike since 2002.

Yesterday’s poll giving the Socialists 40 percent was the best showing for the party since the start of the campaign on Sept 14. In most prior polls, support for the Socialists peaked at about 38 percent and their lead over the Social Democrats was often within the margin of error.

Socialist voters have been defecting to the Communists and the 10-year-old Left Bloc, rather than the Social Democrats, polls indicate. In yesterday’s poll, the Left Bloc had 9 percent, while a Communist-led coalition and the People’s Party each drew 8.2 percent support. In the latest elections, the June 7 vote for the European Parliament, the Left Bloc and Communists took a combined 21.4 percent.

Without a majority, Socrates will be forced to scale back his ambitions.