Spain: Unidos Podemos second party but still not a game changer – ING

Geoffrey Minne, Economist at ING, suggests that no political earthquake is expected to happen on 26 June and Spanish voters should once again try to force the political leaders to form a coalition between at least two of the four biggest parties.

Key Quotes

“A recent opinion poll conducted by el Pais provided us with results relatively similar to those observed during the elections of December. If elections would happen today, Mariano Rajoy and the PP would come out on top with 29.9% of the votes (against 28.7% in December). The second party would be the coalition led by Podemos and its leader Pablo Iglesias, reaching 23.2% (against 24.4% in December).

A large coalition would still be needed and basically two options would be on the table: a large German style” coalition involving both the liberal PP and the socialist PSOE or a “progressive” coalition involving the PSOE, Unidos Podemos and Ciudadanos.

What could be a game changer is the turnout rate. In December the turnout rate was 73% but this figure fell to an expected 68% in May. This shrinkage could weaken the position of Ciudadanos and Unidos Podemos as most of the voters that intend not to vote in June are supporting the two emerging parties. A low turnout would then favour Mariano Rajoy but would not lead him to an overall majority at the parliament. The multi-party system is set to remain firmly anchored in Spanish politics and it seems to be the scenario favoured by Spanish voters as 64% of the respondents strongly prefer a large coalition for the next government.

Looking at macroeconomic indicators, it seems that Spain is holding its breath until the uncertainty is lifted. Despite the fact that many observers were very pessimistic, the economy has appeared relatively resilient.

All in all, the political landscape has not been dramatically changed since the December elections and a broad coalition remains the key scenario. Even if Podemos advertised it was a bigger party, it remains that at least one of the three other key parties will be needed as a coalition partner. Knowing the reluctance of Pablo Iglesias to compromise in previous negotiations rounds, a government led by Pablo Iglesias remains unlikely.”