Spanish Socialists becomes FIFTH EU government to lose power during sovereign debt crisis

By Tim Montgomerie
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8.30pm Alberto Nardelli tweets: 10 years ago about half of the countries that now make up EU27 had left-wing governments. Today, only Austria, Denmark & Cyprus do. The lesson: People can't afford left-wing policies in tough times.

Exit polls suggest the Spanish Conservatives have ended eight incredibly expensive years of socialist rule. The Popular Party led by Mariano Rajoy (pictured) is on course to win at least 180 of the 350 seats in Spain's lower house. Rajoy's Partido Popular has probably won 43% of the popular vote against the Socialist Party's 30%. Bloomberg notes that this is the fifth government to lose power because of economic woes across Europe. Governments have also been replaced in italy and Greece by dictat and in Ireland and Portugal by election.

The Popular Party is expected to embark on a Tory-inspired austerity regime. The PP's Migel Arias told the BBC that Spain has "been living as a very rich country." "People," he said, "are used to a very high level of public services and it takes time to them to acknowledge the realisation that we now are a poor country, that we have lots of debts and in order to pay them back we must reduce public expenditure and then we must recover the confidence of the markets."

James Forsyth at The Spectator hopes that Rajoy will be an ally of Cameron in his ambition to liberalise Europe's economies and repatriate powers. Earlier today, however, on this blog Ben Harris-Quinney noted that UK Tories have invested little in developing a good relationship with the PP "despite widespread predictions across Europe for several years that the Partido Popular would be successful". Ben wrote:

"The Conservative Party still has friends and allies in Spain that have great respect for the UK, but that respect must be reciprocated and advanced at the most senior level of our government if progress is to be made and if real change in Europe is to begin in Spain."

The other big development, of course, is that bearded conservatives now have one of their kind running a country. Hurra!

Ben Harris-Quinney: Can change in Europe begin in Spain?

Ben is Chairman of The Bow Group and President of Conservatives Abroad Madrid. He also writes for the Spanish newspaper La Razon.
Follow Ben on Twitter.

After 7 years of government the PSOE will be swept from power in Spain, but the greatest challenge for the opposition Partido Popular, perhaps in the history of the party, has only begun.

Mariano Rajoy begins the Presidency facing the record unemployment and debt that has been a feature of the Spanish economy for some years now, but also a recent rise in borrowing costs that served as the final tipping point to push the Greek and Italian economies into terminal status.

There will be no time to delay in implementing the economic plan that Spain will rely on to save itself. The lesson from the Coalition government in the UK of swift and determined application of a comprehensive programme of cuts will prove a highly relevant model for Spain.

There is much to suggest that the experience and character of President Rajoy and his government is well suited to the challenge, where Rajoy will struggle is finding his voice on the international stage which is increasingly crowded by strong voices keen to influence the future of the eurozone and global economy.

Whilst open discord between nations in Europe has thus far been minimal, there have emerged clear differences as to how to move forward through the eurozone crisis. Relations have remained cordial between Chancellor Merkel and Prime Minister Cameron, but differences on policy are clear. Cameron has remained critical and opposed to eurozone membership from a British perspective, citing the eurozone crisis as vindication of the Conservative Party position. Conversely German Finance Minister Wolfgang Schauble has been equally critical of Cameron’s position “criticising  from the sidelines” and has recently stated that future UK membership of the eurozone is inevitable.

The new Spanish government’s early movements in Europe are likely to dictate relations for at least the duration of its term in office, whether Spain adopts a position closer to the UK or to Germany. The recent change in the Italian Premiership in the appointment of a committed Europhile in Mario Monti means that Spain will be under pressure from France and Germany to fall into line in the same vein. The door of number 10 will always be open to Rajoy if he seeks to rebuild the relationship between the UK and Spain that flourished under the leadership of Aznar and Blair, but much has changed since the early 2000’s and it will now require a greater leap of faith on both sides.

Where Spain falls ideologically could be just as significant for the UK, another major voice calling for reform in the EU could be enough in the face of the crisis to prompt real change, supported by a groundswell of discontent among the European populous. A chorus of leadership in Germany, France, Italy and Spain however, will be enough to shout down the UK, marginalise calls for reform and prove significant in pushing forward the kind of fiscal regulation that could severely damage the city and the UK economy as a whole.

To build a successful partnership with Spain the UK will have to put as much effort into the relationship as it does into the special relationship, or any other. To this end the Conservative party is ill equipped, and despite widespread prediction  across Europe for several years that the Partido Popular would be successful in this weekend’s election, attention from the UK Conservatives has been luke-warm and slow to react.

The Conservative Party still has friends and allies in Spain that have great respect for the UK, but that respect must be reciprocated and advanced at the most senior level of our government if progress is to be made and if real change in Europe is to begin in Spain.

Mariano Rajoy, the quiet conservative likely to win next week's election, holds the key to Spain's future

By Matthew Barrett
^{Follow Matthew on Twitter}

"Spain's economy records zero growth". "Spain unemployment at record high near 5 million". "Spanish Banks Tackle €26.2 Billion Capital Shortfall". "S&P downgrades Spain on weak growth outlook". Bad news stories about the Spanish economy trickle out almost daily. As a result of the economy grinding to a halt in the last quarter, fears about Spain's ability to meet deficit reduction targets have grown. It could even slip into a recession soon, and some forecasters predict 0% growth for the whole of 2012 - at best. 

This is the background that should see Mariano Rajoy (pictured right), the leader of the conservative Partido Popular (or People's Party/PP), take office as Spain's next Prime Minister in the general election on the 20th November.

This will be 56-year-old Rajoy's third general election as PP leader. In 2004, the Partido Socialista Obrero Español (PSOE), or the Spanish Socialist Workers' Party - were able to use the aftermath of the 2004 Madrid train bombings to rally support and win the election, despite PP having led in polls until the terrorist attacks. In 2008, the PSOE government were able to use the financial crisis to rally last-minute electoral support again and deny Rajoy the premiership. 

This time, Rajoy is taking no risks. He has presented a thin manifesto, and offered little in the way of specific policies. He and his party say that promises now can easily be broken in the coming months and years - given the ever-changing economic crisis. This is factually correct, but Rajoy's unwillingness to be specific is also motivated by his awareness that a policy mistake could jeopardise his double-digit lead in the polls over the PSOE's candidate, Alfredo Pérez Rubalcaba. 

Indignado! How high does unemployment need to go before Spain's political establishment wakes up?

By Tim Montgomerie 
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The overall rate of unemployment in Spain is 21%. It's 45% for young people. Both add up to a deadly recipe for political unrest.

The first pointers to that unrest are now clear.

One pointer came yesterday when the ruling socialist government was hammered in municipal and regional elections. Prime Minister Zapatero's austerity measures may have been praised by international observers but many of the trade unions and public sector interests have walked away from his party in protest. The opposition Popular Party triumphed in all of the thirteen regional governments being contested, winning 38% of the overall vote - against just 28% for the socialists. The PP of Mariano Rajoy (pictured) ousted the socialists from Castilla-La Mancha for the first time ever and also the left-wing strongholds of Barcelona and Seville. The conservatives have promised, as first steps, to audit the books of these regional governments. These audits are expected to show that the fiscal position of the Spanish state is much worse than has been so far declared.

The most vivid sign of the explosive nature of Spanish politics can be seen in Puerta del Sol, in the centre of Madrid. Thousands of young Spaniards turned the huge square into a tent city about ten days ago.

> PHOTOGRAPHIC GALLERY

The so far peaceful protests have caught the imagination of Spain and, via social media, copy cat protests have spread across the whole nation with 50,000 or more young people camping out in town squares, protesting at what are the worst unemployment rates in the €urozone. Although most of the protestors simply want work they have become attached to radical student movements that seek deep cuts in military spending, the closure of nuclear power plants and freedom for digital pirates.

The PP would - if elected in next year's general election - be likely to continue both Zapatero's austerity measures and his support for Spain's continued membership of the single currency.

Spanish conservatives prosper as the socialist government gets the blame for 20% unemployment

The socially conservative Mariano Rajoy (pictured with Nick Clegg during the latter's recent visit to Spain) who holds tough views on immigration has lost two elections since succeeding José María Aznar as leader of El Partido Popular (the Popular Party (PP)). The defeat in 2004 - an election he was expected to win - followed the Madrid train bombings and voter anger at the PP's rushed and unjustified attempt to lay the blame on the ETA separatists.

The economic troubles engulfing the socialist government of José Luis Rodríguez Zapatero may mean Rajoy will finally become Prime Minister in 2012. The latest opinion polls give the PP a 10.5% lead over the socialists but, notes The Economist, there is no great enthusiasm for Rajoy. Two-thirds of Spaniards think he has been indulgent of his own party's corrupt tendencies. Only 20% of voters approve of the way he leads his party.  77% of all Spaniards want both the two main parties to have different leaders by the time of the election.

Rajoy's weaknesses are likely to be overwhelmed, however, by the dire state of the economy. 20% of Spain - 4.6 million workers - can't find work. The unemployment rate was just 11% when Zapatero came to power. Zapatero is having to make budget cuts of $18bn over the next two years as a first effort to reduce the country's deficit (currently 10% of GDP). The cuts include a 5% reduction in civil service pay and a 15% cut in the pay of cabinet ministers. Rajoy has opposed some of these cuts, including a freeze in pensions. This may win him short-term popularity but risks undermining his overall credibility. His credibility is a product of many years of having warned Zapatero that he was spending recklessly.

Zapatero leads a minority government and there is speculation that he could be voted out of office in the autumn. Tacticians around Rajoy believe that the socialists should be given more time to drown in their economic mess and take some of the more painful decisions at the same time.  A 2012 election remains most likely.