Portugal's centre-right claimed a narrow victory in yesterday's general election but Europe could yet be bracing for a surge in support for the populist right.
Luis Montenegro, 51, who leads the Democratic Alliance, polled 29.5 per cent of the vote and returned 79 MPs.
Socialist Pedro Nuno Santos was dealt a major blow as the left-wing party's vote share collapsed from 41.4 per cent to just 28.6 per cent.
The drastic drop ensured only 77 Socialist MPs were elected, down from 120 in 2022.
Luis Montenegro, 51, who leads the Democratic Alliance, polled 29.5 per cent of the vote and returned 79 MPs
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The populist right appear to have benefitted from the collapse in support for Portugal's Socialist Party.
Andre Ventura's populist party Chega increased its number of MPs from just 12 to 48.
Chega also increased its vote share from just 7.2 per cent to 18.1 per cent.
There was little change for either Rui Rocha's Liberal Initiative or Mariana Mortagua's Left Bloc.
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Socialist Party leader Pedro Nuno Santos
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However, the Portuguese Communist Party continued to leak support as it was reduced to just four MPs.
Montengero expects Portuguese President Marcelo Rebelo de Sousa will invite him to form a Government ahead of a March 15 deadline.
He said he hoped the PS and Chega would not form a negative alliance to keep him out of power.
However, Ventura suggested the result showed the country desires a coalition formed between AD and Chega.
Chega said: "This is the night that two-party rule ended in Portugal."
Geert Wilders from PVV PartyGETTYHowever, Montenegro told supporters he is now convinced he will soon form the next administration.
He said: "I always said winning the elections would mean having one vote more than any other candidate, and only in those circumstances would I accept to be Prime Minister."
Conceding defeat, Santos added: "We are going to lead the opposition, we will renew the party and attempt to retrieve those Portuguese who are unhappy with the PS."
However, the result will likely renew concern around Europe as the populist right continues to make inroads ahead of the EU Elections.
A populist surge in Portugal also comes after Geert Wilders' success in the Dutch elections at the end of last year and as Marine Le Pen's National Rally eye-up success in Brussels.