Portugal's government is due to announce its 2013 budget, which is expected to outline the harshest measures yet under Lisbon's 78-billion-euro bailout.

The budget presentation on Monday is likely to face opposition from anti-government protesters.Police expect a big protest outside the parliament as many Portuguese demonstrate that their stoic acceptance of austerity, once much admired, has turned to anger.

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The government is set to introduce sharp surge in income tax to ensure the country meets its budget goals under the bailout. Pension cuts, a financial transaction tax and higher property taxes are also expected in the announcement.

Finance Minister Vitor Gaspar has described the planned tax increases as "enormous" and can amount to nearly two to three months' wages for middle income workers.

Economists dread the feared measures could push Portugal into a recessive spiral like Greece, further undermining Europe's German-inspired austerity drive for the euro's highly-indebted countries.

Until September, Portugal had shown a relatively high level of political consensus and been supportive toward cutting costs for the bailout it sought in 2011.

But that support has been deteriorated, with the main opposition Socialists now pledging to vote against the budget when it is put to parliament at the end of the month.

The economy is expected to contract by at least 3 per cent this year and the government expects a contraction of 1 per cent in 2013. Many economists say the 2013 shrinkage will be greater.

Unemployment is already at record highs above 15 per cent and the government expects it to rise to 16.4 per cent next year.

Source: Agencies