Despite economic growth, Rajoy leaves behind major social issues. Permanently high unemployment and an overburdened social security system will continue to impact Spanish society.

GD – 06/2018

Spain’s new Prime Minister, socialist Pedro Sanchez, won the support of 180 MPs of Spain’s 350-seat parliament in passing a vote of no confidence. Nevertheless, he is likely to have far less support in his future endeavours because his administration only has 84 seats of a total of 350, making him dependent on the support of other groups, especially from Basque and Catalan nationalists. A coalition with the populist Podemos party is not on the cards, although this would have brought an additional 71 MPs to the government’s camp.  

Pedro Sanchez has instead opted for a government that does not include extreme critics of the euro and Europe. According to observers, there are major differences to the situation in Italy, but the new course of a ‘person-oriented austerity policy’ advocated by Sanchez could lead to the first signs of softening of Spanish fiscal policy. The much-discussed reorganisation of Europe’s euro area, or even the idea of a ‘fresh start’, could play a key role in the issue of greater communitisation of certain economic burdens. 

Despite recent economic growth in Spain, there are still major social issues. Permanently high unemployment, an overburdened social security system and uncertainty due to the possibility of regions claiming independence are all having a negative impact on Spanish investment. 

The current situation of a government with only very limited seats could indicate that there will be early elections, which are likely to throw up issues of their own. The next elections are currently scheduled for 2020. Expert opinion has it that minority governments, in times of fundamental conflict where citizens have been let down by social policy for years, have a particularly difficult time maintaining a steady course without prematurely failing.