Europe’s rightward shift continues in Spain’s messy election

While the center-left Labour Party appears to be in the ascendancy in the post-Brexit UK, Spain’s election on Sunday showed that the political center of gravity among the EU’s 27 members may be moving significantly rightward.

The conservative People’s Party won most seats, making major gains, but would need to rely on multiple smaller parties to form any new government, possibly including the far-right Vox. The ballot accentuates an apparent conservative revival seen in the last year in other EU nations, including Sweden, Finland and Italy, with possible bloc-wide policy implications from immigration to climate and wider green issues.

What may make this election the most consequential to be held in Spain in recent memory is that the far right, in the form of the Vox party, could return to power in Madrid for the first time since the dictatorship of Francisco Franco from 1939 to 1975. Plus, Spain holds the six-month rotating presidency of the EU until the end of December, so will help steer the other 26 nations on key policy, including on the Ukraine war.

Amid the significant political uncertainty that remains following Sunday’s election, the markets expect any new PP-led government that emerges in the coming weeks will be moderately market-positive, as reflected in Spanish asset prices over the weeks prior to the election, with a modest outperformance of Spanish equity indices compared to European peers. PP leader Alberto Nunez Feijoo has promised tax cuts and a strategy of boosting economic growth by attracting foreign investment.

While the election has shown most political momentum to be with the PP, no single party won close to the 176 seats needed to form an outright majority. So, either a messy period of minority government or a potentially shaky multiparty coalition could now ensue.

This latest hinge moment in Spanish politics comes in the context of a wider story of fragmentation and polarization. This sees the weakening of the long-running post-Franco political duopoly of the right-of-center PP and the Spanish Socialist Workers’ Party, known as the PSOE, which has dominated the country since the late 1970s.

Several “new” parties have helped fill the political vacuum, including Vox, which only won its first ever parliamentary seats at the last general election. The PP and Vox have previously made political agreements to govern in three of Spain’s regional authorities and have other accords in smaller cities, so have a history of working together.

However, the finalization of a new administration of whatever stripe will now depend on complex negotiations that could take months and may even end in fresh elections. This is what happened in 2019, when the PSOE won two elections in six months but only managed to form a government the second time round. So, while there was much anticipation ahead of Sunday’s vote, what will follow is a pause, with the action starting up again in August, when the Spanish parliament will be reconvened.

Shortly thereafter, King Felipe will meet with the leaders of each political group and ask the one with the greatest amount of support to attempt to form a government. That candidate will then negotiate with potential partners before submitting to a formal investiture vote, which is unlikely to be held before mid-September. If 176 MPs give the candidate their support, they become prime minister.

If that support is not secured, a second parliamentary vote can be held 48 hours later, with the candidate needing to secure only a simple majority. If the candidate loses their first vote, a two-month countdown begins, at the end of which the king must dissolve the parliament and call for new elections. So, parliament could probably only be dissolved in November, with elections being held 54 days after that date.

Sunday’s results show that the high-stakes election gamble of Prime Minister Pedro Sanchez has not gone entirely to plan, after he called the election following his party’s very poor regional and local ballot results in May. That said, the results still leave him with a possible pathway back to power via a potential large multiparty deal.

In recent times, Sanchez’s popularity has dipped, despite the Spanish economy’s relatively strong performance compared to some EU counterparts — for instance, inflation fell to 1.9 percent in June — while polls indicate most electors approve of the policies his Cabinet pursued. Part of his unpopularity stems from criticism of his reliance on small, pro-independence parties in Catalonia and the Basque Country that, ironically, could now become the kingmakers in deciding the next government.

One of the areas that a potential change of government may impact Spain’s current EU presidency is energy policy. Take the example of electricity reform, whereby the PSOE wants to see a more interventionist model as part of the reform of the European wholesale electricity market. A possible PP-led administration, by contrast, is likely to reject this and align with other conservative parties that advocate more market freedom.

The results still leave Sanchez with a possible pathway back to power via a potential large multiparty deal.

Andrew Hammond

However, the election uncertainty will not necessarily impact the effectiveness of the Spanish EU presidency. Firstly, the Brussels-based EU machinery is doing much of the heavy lifting. Moreover, Spain’s EU policymaking institutions, comprising the state secretary for the EU and the permanent representation in Madrid, is well oiled and is on autopilot, already engaged in deep discussions with the Brussels-based institutions.

This bureaucratic stability is not just important for Spain but also the wider EU because much urgent business needs to be transacted, from Ukraine policy to fiscal reform, under Madrid’s presidency. This is not least because the subsequent Belgian presidency, from January to June 2024, could see significant gridlock ahead of next year’s European Parliament elections.

• Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.