Rodrigo Saraiva Marinho is the Executive Director of the Instituto Livre Mercado in Brazil.
The 7-1 reaches Congress
Losing to Germany was never a disgrace. Germany is a four-time world champion. The disgrace was 8 July 2014: in a World Cup semi-final played in Brazil, Germany beat the host nation 7-1. The English love football as much as Brazilians do, and they know what it means when a score becomes a scar: twelve years on, we still avoid talking about that match. “7-1” became our expression for absolute defeat.
That is what the Brazilian left suffered in the general election on Sunday 4 October. Not in the presidential race, which goes to a run-off on 25 October, but in the National Congress, made up of 513 deputies and 81 senators. The left was reduced to a minority in both houses. And the so-called centrão, a bloc of non-ideological parties that for decades backed any government in exchange for jobs and budget allocations, lost its power to referee the game.
What the ballot box said
On one side, Luiz Inácio Lula da Silva (Lula), the left-wing president seeking re-election for the Workers’ Party (PT). On the other, Flávio Bolsonaro, a senator, son of former president Jair Bolsonaro and candidate of the right-wing Liberal Party (PL).
The PL won 121 of the 513 seats in the Chamber of Deputies, the largest bloc of a single party since the 1988 Constitution, and will hold 28 of the 81 Senate seats. The entire left combined will have 124 deputies, almost the same as the PL alone.
This changes the rules of the game. Amending the Constitution requires three fifths of each house: 308 deputies and 49 senators. Outside the left there are 389 deputies. Removing a justice of the Supreme Federal Court (STF), the 11- member constitutional court, is the Senate’s task and requires two thirds, 54 votes; 54 senators have already declared themselves in favour of using that instrument. And because justices retire at 75, the next president could appoint up to four of the 11.
In the presidential race, Flávio finished ahead: 47.03% to 45.16% of valid votes. The polls, once again, did not see it coming: since 2018 they have underestimated the Bolsonaro vote by at least six points. British readers know the phenomenon: the shy Tory effect exists in Brazil too.
From caucus to Bancada
This majority was not an accident. The Brazilian Congress already had a procedural instrument for organising ideas above party lines: the Frentes Parlamentares, formally registered thematic groups, cousins of American caucuses and of Westminster’s All-Party Parliamentary Groups. Through that channel, Instituto Livre Mercado, the think tank I run in Brasília, gathered more than 225 allied legislators.
An All-Party Parliamentary Group gathers sympathisers but binds no one to vote a particular way. Thatcher understood that diffusing sympathy does not govern a country; commitment does.
In 2026 we took that step. The Bancada do Livre Mercado (the Free Market Caucus) offered every candidate a public pledge, inspired by the Americans for Tax Reform pledge: to oppose any tax increase, to fight regulations that restrict economic freedom, and to defend the freedom to work, invest and do business. 725 candidates from 24 parties signed it, for every office on the ballot. 114 were elected: 79 federal deputies and 5 senators. Counting signatories already in the Senate, the Bancada will hold 87 of the 594 seats in Congress from 2027. This is not sympathy: it is a signature, a name and a scoreboard.
Stocks, interest rates and the bill
On Monday the Ibovespa, the main index of the São Paulo stock exchange, rose 7.70% and closed at a record 206,911 points. The real had its largest one-day gain in more than eight years: one US dollar now buys R$ 5.00. Futures rates fell, and the probability of the Central Bank cutting the base rate by half a point in December jumped from 18% to 45%.
The market is pricing a Congress able to cut spending without buying votes at retail. The cost of capital in Brazil is, at bottom, the cost of our political system.
The score that matters
In the Heritage Foundation’s 2026 Index of Economic Freedom, Brazil fell to 134th place, with 52.4 points, “mostly unfree”. In 2025 it was 117th.
Instituto Livre Mercado’s goal is clear: first the top 100, then the top 50, then the top 10. Sunday opened a parliamentary window for a free-market agenda: less tax, less state, more market.
The run-off will decide who occupies the presidency. The 7-1 has already decided who writes the laws. As Mises taught, it is not rulers who change a country, but ideas. Now they have votes.
Annex: The Pledge
English translation of the Termo de Compromisso signed by 725 candidates in the 2026 election.
COMMITMENT TO THE BANCADA DO LIVRE MERCADO
I, ____________________________________________, publicly commit to defending a Brazil where innovation, private property and economic freedom are respected.
If elected, I commit to:
1. Oppose any increase or creation of taxes and always work to reduce them;
2. Fight and block regulations that restrict economic freedom, hinder innovation, discourage investment or create barriers to entrepreneurship;
3. Defend the freedom to work, invest and do business.
Declaration
I recognise that economic freedom, technological innovation and legal certainty are fundamental pillars for Brazil’s development. I therefore make this public commitment to the citizens, entrepreneurs and investors who believe in a freer, more competitive and more innovative country.
Candidate’s signature · Party · State · Brasília, ___ ___________ 2026
This match was the day I almost fell for your national team. It was never about anything Brazilians are or did which made me uniquely not a fan of your team. Just how life unfolded. I always liked Pelé, instinctively. But the image of Roberto Baggio's sadness in the final of the 94 World Cup, my country France facing yours in the final of the World Cup of 98, and at some stage of the 2006 World Cup, almost made it impossible to get into Brazil mania which almost the entire World which loves football, feels.
I remember that match against Germany, and actually thought Germany scored higher than 7 goals. The West Germany team of Jürgen Klinsmann, having once been my late father's football team, me having a real affection for Germany meant I should have been cheering this Brazil drubbing. I watched it live with a big football fan, and wanna be professional footballer. The longer it went on, the more I wanted to support your team, even if that German player Klosser, I think that was his name, was at his apex, and the Mannschaft, was just dizzyingly inspirational. Your sister Argentina and you are the greatest, anyway, when it comes to football. We, the French and the English, and obviously my beloved Azzurris are also in that club these days, but you two are in a league of your own.
Thanks for these insights. I am interested in what happens in your country, because you are one of the most important Nations for the World's food security. Also, because your telenovelas, although not as much as American cinema, were very important for me when I was growing up.
While my country France is an agricultural powerhouse for our continent Europe, you, Brazil, are essential for the World's food security. Well done to your SEARA brand of poultry, British Retail Consortium validated.
Knowing what has already happened at the level of your Congress/Senate is very interesting. It helps underscore that whatever occurs in the runoff of the Presidential election, the wind of small State, lower taxes, sweeping across Latin America, is there to stay. Hopefully, it will spread wealth for the well being of all your People.