[ANALYSIS] Spain’s election ends in a stalemate

Analysis details (09:10)

TL/DR

• With over 99% of the votes tallied, none of the parties have secured an outright majority of 176 seats and there is no easy path for a coalition to emerge from either side of the political divide. As expected, PP’s Feijoo took the top spot, but given the underperformance of Vox, a right-wing coalition is very unlikely. Alternatively, incumbent Sanchez could attempt to form a new minority government, but this would require the support of the pro-independence parties and as such may not be accepted by Congress, if the independence parties are even willing to partake in such a tie-up. Therefore, a grand coalition is potentially the most feasible option at this stage, given Feijoo has previously spoken out in support of a PP-PSOE combination to avoid regional/independence parties attaining kingmaker status; however, it is unclear if Sanchez would agree to this and theoretically ceding the PM position to Feijoo. Finally, in the very real scenario that no coalition can secure a majority of support in the Congress, then the King will dissolve parliament two months after the first mid-August vote and call another wave of elections.

Results

• Despite over 37mln people being registered as eligible to vote, 24mln attended in person and a record 2.4mln utilised the mail-in option, a figure which is better than some expected given the heatwave and number of Spaniards on holiday. Feijoo’s Popular Party (PP) secured 136 seats (prev. 89), incumbent Sanchez’s PSOE 122 (prev. 120), Vox 33 (prev. 55) and Sumar 31 (prev. 38), a result which leaves all parties shy of the 176-majority threshold. Additionally, the poor outturn for Vox means a theoretical PSOE-Vox coalition has just 155 seats and on the other side a PSOE-Sumar tie-up has 153. Given Vox’s poor performance, commentators are taking the view that it is unlikely to be involved in any eventual coalition.

Next Steps

• Given how close the result is between PP and PSOE a number of options could now occur. PP’s Feijoo said he would attempt to form a minority government; however, given MPs are unlikely to back a coalition involving Vox it does not seem possible for Feijoo to garner sufficient support from regional parties alone. Therefore, incumbent Sanchez could retain power despite coming up short in Sunday’s vote.


• Parliament returns on August 17th when the new MPs are sworn in, after which King Felipe VI will speak with the main political leaders and attempt to determine who has the most support to form a government.


• Reminder, Spain’s constitution has a process whereby if an outright majority does not occur then the King proposes a candidate, after which that candidate will outline their political plans and ambitions and request support of the Congress of Deputies. On the first occasion, an absolute majority is needed, if this is not attained then the proposal returns after a two-day break at which point only a simple majority is required. In the scenario this is not attained then new proposals are put forward following the above process. If no form of government has been granted confidence of the Congress two months after the first vote, then new elections are called for.


• Given Vox’s poor results, Feijoo’s only realistic chance for power is a grand coalition with Sanchez’s PSOE. An outcome that the PP leader has previously spoken in favour of as it would remove the influence of the pro-independence Basque and Catalan parties. Additionally, given the slightly soft outurn for Sumar, a left-wing coalition headed by PSOE would need the backing of those pro-independence parties, specifically the ERC & Junts. However, Politico interprets a tweet from Junt’s Puigdemont as ruling out backing Sanchez. If that is the case, and assuming parties stick to their lines when voting takes place, then a grand coalition of PP-PSOE seems the only feasible solution at this point, short of new elections.


• However, it remains to be seen if Sanchez would rather hold the prospect of independence referendums open in order to avoid ceding the PM position to Feijoo; albeit, the likelihood of Congress giving majority support to a government contingent on a potential independence referendum(s) is slim.

24 Jul 2023 - 09:10- EquitiesResearch Sheet- Source: Newsquawk