Change ahead
November 20, 2011
The outcome of Sunday's election in Spain is not likely to come as a surprise: observers unanimously expect the conservative opposition People's Party (PP) to win by far the most votes.
The center-right party is hoping for at least 45 percent of the vote and the majority of seats in parliament - but come election night, commentators are likely to focus less on the PP's victory than on the extent of the Socialist party's (PSOE) losses.
After seven years at the helm, the PSOE might have to concede its worst results since 1977, when Spain held its first free elections upon its return to democracy. Opinion polls predicted that, as a result of the economic crisis and high unemployment, the Socialists will win no more than 30 percent of the vote.
Recession looms
Spain's economy stagnated in the third quarter of 2011 and unemployment has risen to about 22 percent - a whopping 45.8 percent among young people - by far the highest figure within the European Union. Private incomes dropped this year by 4.4 percent compared to 2010.
Most Spaniards hope a new, conservative government might spell the beginning of an era of economic growth similar to 1996, when unemployment was also at more than 20 percent.
At that time, the PP took over after 14 years of Socialist rule, and between 1996 and 2004 Spain experienced an economic miracle, bolstered by a building boom and massive international financial investments.
Zapatero's Socialist government managed to maintain that prosperity until the outbreak of the financial crisis in 2008. The economy has steadily deteriorated since then, and due to the way in which Spain is now involved in international structures, an approach similar to that of 1996 is not feasible.
Imponderable future
PP leader Mariano Rajoy has not revealed much about his economic program, other than that his first and foremost goal is to create jobs. He has not commented on how he plans to reorganize Spain's finances and honor his pledge for no social cuts.
Recent political changes in Greece and Italy do not yet appear to have alleviated the situation substantially in those countries, and no one can predict how the markets will react to a change in Spain's government.
Interest rates for Spanish debt have reached a record high, and the country is drifting further and further away from the goal of ending 2011 with its budget deficit down to 6 percent.
The situation raises the question whether a new government will have any freedom of action concerning economic and tax issues, or whether it will have to give in to market pressures and submit to control from Brussels and Berlin. The latter appears to be the most likely.
The opposition PP has so far supported all the reforms demanded by the international community and approved by the Socialist government, including a controversial constitutional reform aimed at limiting state debt by law. Last year, Zapatero pushed through cuts amounting to 10 billion euros ($13.5 billion) - but he paid dearly with a drop in popularity and the end of his political career.
Experts said Rajoy, Zapatero's expected successor, will have to cut more than three times that figure if he wants to adhere to Spain's pledge of lowering the country's 2012 deficit to 4.4 percent of gross domestic product.
Author: Emili Vinagre / db
Editor: Michael Lawton