People’s Party leader Mariano Rajoy won the biggest parliamentary majority in a Spanish election in 29 years and called on Spaniards to work together to prevent the nation being overwhelmed by the sovereign debt crisis.
The People’s Party won 186 of the 350 seats in Congress compared with 110 for the Socialist Party’s candidate Alfredo Perez Rubalcaba, based on 97 percent of the vote counted. That’s the worst showing for the Socialists since Spain returned to democracy in 1978.
“Today more than ever our destiny is played out in and with Europe,” Rajoy said in an acceptance speech in Madrid. “We will stop being a problem and become part of the solution again.”
Rajoy, 56, who said on Nov. 18 he hoped Spain wouldn’t need a bailout before he’s sworn in as prime minister in 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 23 percent unemployment rate and borrowing costs back at the levels Spain was paying before it joined the euro.
The ruling Socialists became the fifth European government to be toppled by fallout from sovereign debt crisis, after Italy and Greece appointed new prime ministers and Irish and Portuguese voters fired their leaders after they sought bailouts. Spaniards gave Rajoy the biggest mandate of the group to respond to the crisis.
“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, even if ambitious and swiftly enacted, can help turn sentiment around.”
Spain’s 10-year bond yield rose as high as 6.78 percent on Nov. 17, the most since the start of the euro, with the gap between Spanish and German borrowing costs ending the week at 441 basis points, or 4.41 percentage points. As yields spiraled, Socialist Prime Minister Jose Luis Rodriguez Zapatero, who didn’t seek re-election, called on the European Central Bank to act “immediately.”
The PP owed much of its success to the collapse in support for the Socialists. The PP won 10.5 million votes, little changed from the 10.2 million four years ago. Support for the Socialists plunged, with the party getting 6.8 million votes, a drop of about 4.5 million votes from 2008.