With Portugal's main court rejecting cost-cutting measures which are central to financial aid, the country's already faltering austerity program has been thrown into further doubt, adding to pressure on the euro zone, analysts told CNBC.
"Fiscal austerity in Portugal is failing," Nick Spiro, head of Spiro Sovereign Strategy, told CNBC. "Portugal's 2011 bailout program went off track some time ago. If it were not for the troika's leniency and the dramatic rally in Portuguese debt, the program would have already failed by now."
Portugal's prime minister warned this weekend that more spending cuts are coming, in order to meet the conditions of the 78 billion euro ($101 billion) bailout it received in 2011. His comments came after the country's Constitutional Court ruled on Friday that wage and pension cuts to public sector workers were unlawful.
Speaking in a televised address on Sunday, Pedro Passos Coelho responded to the ruling saying that it posed "serious obstacles and risks" to the 2013 and 2014 budget and had "very serious consequences" for the country.
The European Commission responded late on Sunday by saying that Portugal must fulfill its bailout commitments to get an extension of maturity payments, which it requested along with Ireland.
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"The court's ruling is the latest in a string of social, political and legal setbacks for the Passos Coelho government. Taken together, they undermine the credibility of Portugal's adjustment efforts and threaten the Treasury's plans to regain full access to the debt markets," Spiro told CNBC.