Spain is facing political chaos after yesterday’s election produced no clear winner and saw a surge in support for the far-left.
The governing conservative People’s Party of Prime Minister Mariano Rajoy remains the largest party but fell well short of a majority. Meanwhile, the radical leftist ‘Podemos’ – which has been likened to Greece’s Syriza – surged into third place with 20.7 per cent of the vote and 69 seats.
The centrist Citizens Party did much worse than polls had predicted, winning 14 per cent of the vote and only 40 seats.
The uncertainty comes while Spain is in the midst of a constitutional crisis, with the region of Catalonia trying to break away and declare independence, something Spain’s outgoing government vehemently opposes.
The Financial Times reports that the country’s stock markets fell today as concern over a long period of political instability, while analysts at Deutsche Bank wrote about the weakness of the Citizens Party: “This changes the post-election scenarios — a centre-right coalition cannot reach a majority — and injects even greater political uncertainty. This is unlikely to be a positive development for markets.”
Spain is one of the largest economies in the Eurozone, and any economic instability there could have a knock-on effect across the European Union, just months after the crisis in Greece.
The closeness of yesterday’s result means there is now no obvious government for Spain. The governing conservatives will be unable to form a majority with the Citizens Party, while a deal between the opposition Socialists, Podemos and Citizens also looks unlikely as Podemos have said they will refuse to serve as junior partners in any coalition.
The only stable arrangement would be a “grand coalition” between the conservatives and Socialists, but senior Socialists have warned against such a deal.
If no one can form a government, new elections will likely have to take place early next year, but there is no indication any clearer result would happen.