Spanish Socialists Pin Hopes on Voter Reaction After Second Loss

  • Parliament must choose a premier by May 2 to avoid new ballot
  • Pollsters will start fresh round of surveys on Monday

Spaniards’ response to the Socialist Party’s second, failed attempt to form a government on Friday may shape the country’s political future as party officials return to the negotiating tables next week.

Pedro Sanchez

Photographer: Angel Navarrete/Bloomberg

Socialist leader Pedro Sanchez was defeated by 219 votes to 131 as he sought lawmakers’ backing almost 11 weeks after December’s inconclusive election. The pollsters will swing into gear on Monday to find out what voters made of the drama amid concerns the standoff could hold back the economic recovery.

Sanchez and his ally Albert Rivera, who leads the pro-market group Ciudadanos, are betting that voters will respond positively to their attempts to broker a compromise, increasing the pressure on caretaker Prime Minister Mariano Rajoy and the anti-austerity group Podemos to lift their block on the legislature.

“There were two parties, the People’s Party and Podemos, who blocked those parties, the Socialists and Ciudadanos, who were proposing a solution to the Spanish political logjam,” Sanchez told reporters after the vote late Friday. “I’ll keep working to achieve the majority that our country needs.”

Spain’s 10-year bond spread has edged higher since the election and the debt was yielding 132 basis points more than similarly dated German debt on Friday. The differential narrowed by 5 basis points from the previous session.

Slower Growth

The political uncertainty will eventually begin to weigh on investment and consumption, helping slow the pace of economic expansion to 2.6 percent this year from 3.2 percent in 2015, Antonio Garcia Pascual, an economist at Barclays Plc in London, wrote Friday in a note to clients. Already in January, Jose A. Zarzalejos, a director at PricewaterhouseCoopers in Madrid, said he was seeing corporate clients put their acquisitions in Spain on hold.

Spain’s political class is struggling to adapt to its new reality after the country’s two-party system was swept away by the fallout from the economic crisis.

The Socialist leader argued that many of the measures he agreed with Rivera would be consistent with the objectives of rival parties. Podemos leader Pablo Iglesias is insisting that Sanchez split with Ciudadanos to form a progressive alliance while Rajoy says his People’s Party voters won’t support any government unless he’s leading it because it won the most votes on Dec. 20.

“Spaniards now know what each party is willing to do with their votes,” said Jose Ignacio Torreblanca, head of the Madrid office of the European Council on Foreign Relations, said in a telephone interview. “The political spectrum is now divided between the parties which signed the pact, and those which are against it.”

Public Reaction

Rivera’s conciliatory, patriotic tone scored the best ratings after the extended debate on Wednesday, with Iglesias polling the worst after a blistering attack on the Socialists. Rivera’s favorable ratings outweighed unfavorable by 24 percentage points whereas Iglesias’s unfavorables were 33 percentage points higher, according to a Metroscopia poll of 1,000 people conducted the following day. Sanchez’s ratings were balanced, while Rajoy’s unfavorables were 24 percentage points higher.

The acting prime minister stuck to his guns on Friday, labeling the Socialists’ attempts to piece together a majority as “corruption” -- even though it’s the PP labeled a criminal organization by the National Court, which is investigating a bribery ring among party officials. Iglesias changed tack, provoking laughter in the chamber with a reference to the shock he’d caused on Wednesday by kissing a party colleague after his speech.

“Love is flowing in Spanish politics,” Iglesias said. “Pedro, that just leaves you and me.”

The Socialists are trying to focus the debate on their policy proposals as they race to seal an agreement before the two-month deadline expires. At least 140 of the 200 measures Sanchez and Rivera agreed earlier this month would be consistent with Podemos’s objectives, the Socialists’ leader in the Senate, Oscar Lopez, said. In addition to Podemos, the Socialists are also seeking support from the Basque Nationalist Party and the United Left. The single lawmaker from the Canary Islands Coalition backed Sanchez on Friday.

Before it's here, it's on the Bloomberg Terminal.