Rajoy sweeps to record victory in Spain
The Financial Times
Mariano Rajoy led Spain’s centre-right Popular party to the biggest election victory in its history on Sunday, consigning the incumbent Socialists to the political wilderness and making them the latest casualties of the eurozone’s deepening sovereign debt crisis.
With 99 per cent of the votes counted, the PP had secured 186 seats in the 350-seat lower house of parliament, leaving the Socialists with just 110.
In an address to the nation from the balcony of the PP’s Madrid headquarters, Mr Rajoy pledged to run an inclusive government to try to restore Spain’s economy and its international reputation.
“There will be no enemies for me other than unemployment, the deficit, excessive debt and economic stagnation,” he said to cheers from supporters in the street below, adding that the task ahead was “immense” and that there would be “no miracles”.
Mr Rajoy also said he would convene a meeting with the governments of Spain’s 17 autonomous regions, which have been blamed for their contribution to a public sector deficit that peaked at 11.1 per cent of gross domestic product in 2009.
The normally undemonstrative PP leader allowed himself a brief jump for joy on the podium in the company of his party colleagues before warning of difficult times ahead and pledging to start work on Monday morning.
Alfredo Pérez Rubalcaba, the Socialist candidate, recognised that his party had “clearly lost” the elections and reminded Mr Rajoy of “the important responsibility” he had during an “especially difficult situation for Spanish society”.
The PP’s victory heralds the latest change of government in the eurozone – following those in Ireland, Portugal, Greece and Italy – as a result of the regional sovereign debt crisis that has already pushed the first three into bail-outs.
Both Italy and Spain are now threatened by the unsustainably high interest rates they have to pay to borrow on the bond markets. So large are their economies and their funding needs that if they too seek help the 17-nation eurozone itself would be at risk of collapse.
Interest rates for Spain and Italy reached critical levels last week, threatening the public borrowing programmes of both countries despite Mr Rajoy’s anticipated election win and the appointment of Mario Monti, a former European commissioner, as Italian prime minister.
President Nicolas Sarkozy of France – also of the centre-right – said on Sunday night that he knew he could count on Mr Rajoy to help overcome the “unprecedented economic and financial crisis” and to restore stability and growth to the eurozone.
On Thursday, the Spanish Treasury issued 10-year debt at an average annual yield of nearly 7 per cent, although intervention by the European Central Bank subsequently brought down rates in the secondary markets.
Details of the Spanish election results, and Mr Rajoy’s announcements, will be examined on Monday by eurozone bond market investors eager to know how Spain plans to continue cutting its annual budget deficit without falling back into economic recession.
Mr Rajoy, 56, has promised to enforce budgetary austerity and liberalise the rigid labour market in an effort to cut unemployment of more than 5m and restore the confidence of jittery international bond markets.
By winning an absolute majority of seats in the lower house of parliament, the PP will not need to rely on support from small regional parties to pass new laws.
Even so, several smaller parties did well in the election, notably the hard-left Izquierda Unida (United Left), which won support from disenchanted Socialists, and Amaiur, which represents radical Basque nationalists. IU won 11 seats and Amaiur took seven, beating the once powerful Basque Nationalist party (PNV).
José Luis Rodríguez Zapatero, the Socialist prime minister since 2004, was applauded by some bystanders and insulted by others when he cast his vote in Madrid on Sunday morning. He has been sharply criticised by business leaders for being too slow to accept that the crisis after the collapse of Lehman Brothers in September 2008 required drastic austerity measures and reforms to restore Spain’s competitiveness.
Spain’s next government, which can take power only after parliament reconvenes on December 13, will face the immediate task of trying to soothe bond markets. Mr Rajoy and Mr Zapatero have agreed to work together if necessary in the interregnum.
Investors have lost confidence in the ability of several eurozone nations to honour their debts following negotiations on a Greek debt restructuring.
On the last day of election campaigning on Friday, Mr Rajoy pleaded with financial markets to grant new governments “more than half an hour” in which to turn round their economies.
Many Spanish voters grew weary of Mr Zapatero and the Socialists after more than three years of crisis, although most of them are aware that the incoming government will struggle to revive economic growth and restore investor confidence.
“We need something fresh,” said José Luis Varela, an architect, shortly before casting his vote for the PP in a wealthy suburb north of the capital Madrid on a rainy autumn day. “A changeover is necessary.”
Aurelio Román, 28, who works in a logistics company, said he strongly believed that Spain needed to push through liberalising reforms, but was not planning to vote for either of the large parties.
“I think the PP could be the party to make some of the reforms we need, but I will not vote for them, as I cannot support their social and religious conservatism,” he said. “We need to make changes in this country but we lack a real liberal party to make them.”
Elena, 35, said she was backing the Socialists. “They have ideas to reduce unemployment, and to exit the crisis, with fewer cuts to social services. The PP have not made any concrete proposals – their programme basically doesn’t exist.”