PSOE hold Andalusia as fears over Greek style government subside

Andalusia elections

Spanish centre left party PSOE have secured a resounding victory in the Andalusian regional elections. The party fell eight seats short of securing an overall majority, but will be relieved that their vote stood firm among the electorate.

PSOE, who are led by Susana Díaz in Andalusia, won 47 seats, while the centre right Partido Popular received 33 seats. Newcomer Podemos will be buoyed by its showing, with the party taking 15 seats in its first regional election, thereby becoming the third largest party in the government. Centrist party Ciudadanos will be the fourth largest party having won nine seats.

Andalusia is the most populated of the country’s autonomous regions, with a population of 8.4 million. Yet 34.2% of the eligible workforce are currently without jobs, the highest figure in the whole of Spain. Such an alarming rate of joblessness would ordinarily be enough to see the ruling government turfed from power, but Andalusia has been a particular stronghold for PSOE since Spain returned to democracy.

Even a massive corruption scandal which involved the siphoning off of public funds earmarked for the unemployed-known as the ERE case- was not enough to dislodge the socialists from government. That may be attributable to the impressive campaign run by Susana Díaz, who has been keen to distance herself from the scandals of her predecessors.

Yet the positive results for PSOE should not be viewed as a harbinger of future election results across the country. The Andalusian vote kicked off a year when Spaniards go to the polls in both regional and general elections as well in Catalonia, where the question of independence will return to the fore.

Ahead of the general elections, Podemos hold a narrow lead over the ruling PP and PSOE in nationwide opinion polls. The strength of support for the party led by Pablo Iglesias has led to concerns that Spain could be headed in the same direction as Greece after the next elections. However those fears have been assuaged somewhat since the emergence of Ciudadanos into the electoral mix.

According to analysts at Barclays:

“The most interesting news is that Ciudadanos, a centre party with a pro-growth liberal agenda seem to be grabbing some of the votes dropped by Podemos and is currently polling 4th with around 18% of the vote intention. Ciudadanos places itself squarely on the centre of the Spanish political map, therefore it could theoretically be a potential coalition partner for either centre-right PP or centre-left PSOE.”

Indeed markets seem to be unconcerned about the prospects of a populist spill over from the Greek elections to Spain. To emphasise the point, the Spanish risk premium currently stands at 103 bps against the 10-year German bund, having hit 637 bps at the peak of the eurozone debt crisis back in 2012.

 “We are now less concerned about the Spanish political outlook and about the potential impact of Greek politics on support for Podemos. This is mainly because the scenario with a radical-left led government in Spain seems increasingly less likely as vote intention appears to be shifting,” Barclays added in a note sent to The Corner.

 

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