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Photograph: Photo by Alexander Baxevanis, used under CC BY

Portugal and the European Union are struggling to find common ground on the country's budget for this year, with an EU spokeswoman saying on Monday that "big differences" remain between the two sides.

Eurozone member states have to submit their draft budgets to the European Commission every year for scrutiny. The EU's executive can request any plans it deems inappropriate to be redrawn, under budget discipline rules that are meant to spot financial trouble early on.

Portugal was supposed to submit its draft 2016 budget by October 15, but missed the deadline after elections that saw Prime Minister Pedro Passos Coelho's alliance lose its absolute majority in parliament.

Passos Coelho was later toppled in a no-confidence vote and replaced as premier by Socialist Party leader Antonio Costa. The new government then submitted the 2016 draft budget to the commission.

"There are big differences and we're working with the Portuguese authorities to close the gap," commission spokeswoman Annika Breidthardt told journalists in Brussels on Monday.

The process is part of the EU's enforcement of broader rules that require public deficits in member states to be limited to 3 per cent of gross domestic product (GDP) and public debt to be no higher than 60 per cent of GDP.

The EU has the power to issue sanctions against eurozone countries that fail to respect those deficit and debt rules.

Portugal's economy returned to growth in 2014, three years after receiving a 78-billion-euro (85-billion-dollar) bailout programme from the eurozone and the International Monetary Fund. The country has the third-largest public debt in the EU.

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