Spanish PM calls snap election after budget fails to pass … CNBC
Spanish PM calls snap election after budget fails to pass
* Spain will elect a new government after the Socialist Workers’ Party failed to pass its 2019 budget.
* The vote will be held on the April 28th.The door could now open for a radical right-wing party to take seats in the Spanish Congress.
The government of Spain formally called for a snap general election Friday following its failure to pass its 2019 budget through Congress.
Earlier in the week, the ruling Socialist Workers’ Party (PSOE) failed to secure the additional votes it needed from two separatist Catalan parties, the Republican Left of
Catalonia (ERC) and the Catalan European Democratic Party (PDeCAT).
With the government paralyzed by a lack of support, Prime Minister Pedro Sanchez called for an election to break the impasse. The vote will be held on the April 28th.
PSOE’s budget for 2019 wanted to slash the deficit but spend some money in certain areas, including regions such as Catalonia. On Tuesday, the country’s Finance Minister Maria Jesus Montero said the Catalan parties
should accept the deal or risk damaging “Catalans in particular, and all Spaniards in general.”
However, both Catalan parties have rejected calls to come to heel on the budget, demanding that any deal would have to include a referendum on independence for the region.
The prospect of a softening from the Catalan parties, who want the region of Catalonia to gain independence from Spain, was always unlikely given the backdrop of a current trial of the leaders of the failed 2017
Catalan independence movement.
Twelve separatist leaders are currently appearing at Madrid’s Supreme Court on a number of charges including rebellion and sedition. Jail terms of up to 25 years are possible.
Yield on Spanish sovereign bonds rose before the election announcement. Yield on fixed income debt moves inversely to the asset price.
Spain’s fragmented Congress
The center-right People’s Party (PP) could see gains in an election and form a deal with right-wing radicals, VOX, which according to polls, has been quickly gaining support.
Further complicating Spain’s disjointed Parliament are the current solid levels of support for the left-wing populist party Podemos (We Can) and center-right Ciudadanos (Citizens Party).
In a note Monday, Teneo Intelligence’s Deputy Director of Research Antonio Barroso said forming a new Spanish administration with a clear mandate to legislate will prove a challenge.
“Any future government is likely to face a fragmented parliament, which will again complicate the passage of laws and the implementation of big economic policy shifts,” said Barroso.