Tuesday 27 June 2017

Conservatives sweep to power in Spanish election

Daniel Woolis in Madrid

People's Party (PP) leader Mariano Rajoy won the biggest parliamentary majority in a Spanish election in more than a quarter century, giving him a free hand to overhaul an economy that risks being overwhelmed by the sovereign debt crisis.

The PP won 44.5pc of the vote and 186 of the 350 seats in parliament, compared with 28.7pc and 110 seats for the Socialist Party's candidate Alfredo Perez Rubalcaba, with 91pc of the vote counted. That's the worst showing for the Socialists since Spain's return to democracy in 1978.

"We are facing a decisive moment for Spain," Mr Rajoy said in an acceptance speech in Madrid. "We are at a crossroads that will shape the future of this great country not just in the next few years but the next few decades."

The ruling Socialists became the fifth European government to be toppled by fallout from sovereign debt crisis, after Italy and Greece appointed technocratic administrations and Irish and Portuguese voters fired their leaders after they sought bailouts. Spaniards gave Mr Rajoy the biggest mandate of the group to respond to the crisis.

Mr Rajoy, who said on November 18 he hoped Spain wouldn't need a bailout before his new government takes over in a month's time, has pledged to slash the budget deficit and regain the nation's AAA credit rating. He inherits a stagnant economy with a 23pc unemployment rate and borrowing costs back at the levels Spain was paying before it joined the euro.

"From a market standpoint, an absolute majority for the PP is just what the doctor ordered," said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. "We will now see to what extent domestic policy reforms can help turn sentiment around."

Spain's 10-year bond yield rose as high as 6.78pc on November 17, the most since the start of the euro.

As yields spiralled, Socialist prime minister Jose Luis Rodriguez Zapatero, who didn't seek re-election, called on the European Central Bank to act "immediately".

The bitterly fought campaign has been dominated by a staggering unemployment rate and Europe's debt crisis.

The numbers suggest Spanish voters have shifted clearly to the right as they confront their worst economic crisis in decades and choose new leaders to pull them out of it.

The country is at the forefront of the eurozone's sovereign debt crisis, with the government's borrowing costs rising last week to levels near where Ireland, Greece and Portugal had to request huge bailouts from the European Union and the IMF.

Mr Rajoy's expected win follows two election bid losses -- in 2000 and 2004 .

Irish Independent

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