Win for democracy, how will Merkel react?

The majority in the Portuguese Parliament on Tuesday staged a revolt against the minority government kept in office by the President in order to maintain the austerity policies insisted upon by Berlin.

As the BBC News Portugal's left-wing opposition topples minority government 11/10/2015 reports:

Portugal's government has been toppled less than two weeks after taking power after left-wing opponents rejected its programme in parliament.

A centre-right coalition won the most votes in October's election but lost its overall majority.

A new leftist bloc has now voted 123 to 107 against the administration's programme, prompting its collapse.

The move could lead to a new government led by the Socialist Party, likely to focus on alleviating austerity.

Deutsche Welle also reports on the parliamentary vote, In Portugal, left-wing opposition topples government in no-confidence vote 10.11.2015

If the leftist alliance forms a new government, it would be the first ruling coalition to include the Communists and the Left Bloc in the modern political history of Portugal. The country only returned to democracy in 1974, after decades of right-wing dictatorship.

Portugal's president, Anibal Cavaco Silvo, must first meet with party representatives before any change to the government can take place. Until then, the prime minister will remain in power.

Portugal requested a 78-billion-euro ($88-billion) bailout in 2011 and only left the scheme in May 2014, with the previous Coelho administration pushing through harsh budget cuts. ...

The opposition lawmakers intend to roll back tax cuts, as well as cuts in pay, pensions and public services. They also speculated about restoring several public holidays that were cut to boost productivity.

It remains to be seen if Angela Merkel's government will retaliate against the new majority bloc because they want to defy her austerity dictates.

Spiegel Online reports in Misstrauensvotum: Linke Opposition stürzt Portugals Regierung 10.11.2015 that between 2010 and 2014, the percentage of the government's budget dropped from over 11% of GDP to 4.5%. So while Portugal was hammered by the post-2008 depression in the eurozone periphery, it was also drastically withdrawing the stimulus provided by government spending. That's the Herbert Hoover austerity program on which Merkel's government insisted. It acted in a procyclical way, i.e., it made the depression worse.