As expected, Mariano Rajoy has led his People’s Party to gain an absolute majority in parliamentary elections held against a backdrop of economic uncertainty. Official results have shown that the People’s Party will hold 186 in the 350 seat Congress of Deputies. The incumbent Socialist Workers’ Party, led by Alfredo Pérez Rubalcaba drop down to 111 seats, their worst showing for 30 years.
The economy was unsurprisingly at the top of the election agenda, in particular the extraordinarily high unemployment rate of 22% (more than 5 million people). Added to this, were continual fears about future economic growth and the government’s inability to maintain budget deficit targets, especially in respects to spending by regional governments, to a level that is deemed sustainable by fellow eurozone leaders and, possibly more importantly, the financial markets. However even though the outcome of Sunday’s election was always likely, markets have remained cautious about Spain’s future and auctions of 10-year government bonds have seen their yields hit the dreaded 7% that triggered crises in Greece, Ireland and Portugal. Although markets in Spain are generally expected to rally in response to the result, the immediate reaction on Monday saw stocks in Madrid drop by 1.8% in line with other European markets.
One the main reasons for this is the uncertainty around the economic programme likely to be implemented by Rajoy, who has claimed that any specific pledges during the campaign would likely be irrelevant when he finally becomes president. The People’s Party’s campaign has however indicated how Rajoy is likely to approach many of the decisions he will face when in office. Rajoy’s campaign focused around the issue of austerity and argued for a smaller state, with lower taxes, less regulation and some commitments to privatisation. A target for bringing the budget deficit down to 3% by 2013 has been established and there has been suggestions that the new president may attempt to rush through emergency measures immediately upon winning the election. Rajoy’s administration will not officially be sworn in by the King until mid-December, but given the immediacy of the current crisis in Europe, the new president may be able to find a way to introduce interim measures until then. The outgoing socialist president José Luis Rodríguez Zapatero had been working hard to ensure that Spain remains unnoticed within the Eurozone, at a time when countries such as Greece and Italy have garnered so much attention. Following these elections, he will no longer need to worry about remaining invisible as he will be exiting the political scene altogether. Upon winning the poll, his successor said:
“Difficult times are coming. Spain’s voice must be respected again in Brussels and Frankfurt… We will stop being part of the problem and will be part of the solution”
In many ways, Mr Rubalcaba’s role in these elections has been to try and keep Mr Rajoy on his toes and in recent television debates he has accused the People’s Party of having secret plans for major spending cuts and privatisation. In fact, Rubalcaba’s chances of victory were played down by such an extent by some that it has been suggested that he was already playing the role of opposition leader against a “president Rajoy”.