Since the beginning of 2014, the Spanish economy has been recovering from a very tough crisis – unemployment jumped from 8% in 2008 to 26% at the start of 2014 and has now fallen to 18.9%. This is in part thanks to the ECB’s extremely expansionary monetary policy and low interest rates. Now after Donald Trump’s victory, everything could become unstable.
Mr Rajoy has appointed his new cabinet ministers on Friday. When we talk about governance in Spain, with what is clearly a minority government, the socialist party’s participation in this future looks inevitable. And only then will we witness its capacity for reinvention and getting past the slogans.
Today Mariano Rajoy has been sworn in as Prime Minister after Saturday’s investiture session. He obtained a simple parliamentary majority with 170 votes in favour, 69 abstentions, 111 votes against and 1 absentee. So at last the period of uncertainty which had lasted since December 2015 is over.
The most important thing is not the fact that Rajoy has been saved, although it is, because he is giving investors and businessmen reasons to still have confidence in Spain. But it is the fact that he has saved the country from the worst case scenario: a return to times of misrule, which in this case would have been even more bloody for the country.
After successive defeats in the general elections over the last four years, the socialist party has ousted its leader. This time round, the dismissal was carried out by force, with an agonising voting process via a show of hands after 12 hours of debate over how and what to vote.
Yesterday Spaniards voted again six months after the last general elections on proposals which had changed very little; the only relevant novelty was the integration of Izquierda Unida (IU) and Podemos which in the end turned out to be irrelevant. The new/old left has not gained anything obtaining the same number of seats and votes as in December, when IU ran on its own.
Spain’s conservative People’s Party (PP) has won Sunday’s repeat general elections with 33% of votes and 137 seats. The Socialist party came second with 85 seats, while the coalition Unidos Podemos obtained an upsetting result of 71 seats and third position. Finally Ciudadanos obtained 32. These results came as a surpise as the polls had pointed to a very different outcome. But they provide an opportunity to break six months of political deadlock.
Today voters will decide which parties have a chance to decide Spain’s future government. The latest opinion polls show the right-wing Partido Popular winning the elections but in need of a helping hand from the Socialists to secure enough backing. The leftist movement Podemos emerges second in the people’s choice, with the potential to seize power if it forges a coalition with the Socialists. So once again, social democrats hold the key to government. An uneasy prospect as supporting others might wreck their future standing.
In the last few years, Spain has halved its deficit and emerged from a recession and the threat of a bailout which could have pulled all the eurozone down with it. Furthermore, it is now one of the countries with the highest growth – when the rest of the eurozone is still dragging its feet eight years after the start of the crisis – and unemployment is trending lower. But while caretaker Economy Minister Luis de Guindos keeps repeating Spain may not be sanctioned for non-compliance with its deficit target, everything indicates this will happen at the beginning of July.
Within the German government and amongst the (serious) media there is a fair amount of comprehension towards the PP government. This is in part, I suppose, because some party members have taken advantage of official contacts to explain the reforms undertaken (particularly the labour reform) and how they identify with the demands of a tough adjustment programme. Furthermore, they have no doubt offered support for German proposals within the EU or the Eurogroup