Spain’s socialists announce intention to form government

Spain’s acting President, socialist Pedro Sánchez has announced its intention to form a government even though it was the second most voted party. “It is the time to translate the social majority into a majority in Congress,” Mr. Sánchez said Monday 31st.

Mr. Sánchez will again try to sign alliances with left-wing party Sumar and nationalist parties in Catalonia and the Basque Country to add up the necessary majority to rule in the next term.

On July 23rd, the conservative Popular Party (PP) won the general elections, with 137 seats in parliament and 33% of the votes. However, these figures are not enough for its leader, Alberto Núñez Feijóo, to be sworn in as president. Not even with the support of far-right wing party VOX (33 seats in parliament). Both together add 170 seats in Congress, but it would need 176 seats to have the majority and be able to rule.

Against most of the pre-election polls, the Socialist party slightly improved its results from the 2019 general elections and won 121 seats, but the support has clearly increased compared to the regional elections celebrated on May 28th. So now the votes between the two major parties in parliament has been reduced. The tight results between the left and right blocks raise uncertainty for the design of a future government.

King to call candidates to hear ruling proposals

August 17th, Spain’s new parliament will be renewed following the general elections results. Spain’s King, Felipe VI, will then call the leaders of the two most voted parties, the ones that have the possibility of forming government. This will take place around August 21st. The first one to be called will be the PP leader Alberto Núñez Feijóo, as the most voted party. Mr. Feijóo will then present the King with his proposal to form a government. If he has no possibility to do so, the turn will be passed to the leader of the second most voted party, socialist Pedro Sánchez.

The PP seems to have less chances to add up other political parties to their government proposal as its coalition with far-right party Vox is a clear red line for the rest of the Spanish political spectrum. In the other hand, the Socialist party has more probabilities to join forces with other different parties and end up adding the necessary representatives to form a government. Mr. Sánchez is open to negotiate with pro-independence Basque and Catalan parties to reach the needed majority in exchange for further compromises with their nationalism ambitions. These are clear red lines for the PP, which is completely against leaving Spain in the hands of those who want to break up with the unity of the nation.

Spanish banks profits grow by 20.2% in H1

Large Spanish banks -Santander, BBVA, CaixaBank, Bankinter, Sabadell and Unicaja Banco- reported a combined net profit of €12.3 billion between January and June, 20.2% higher than a year earlier and above expectations, thanks to improved margins.

With the backdrop of rising interest rates, which has an effect on Euribor – the index to which most variable-rate mortgages are referenced – banks’ business is becoming more attractive and more profitable. Spain’s listed Ibex banks are preparing to repeat figures similar to those of the first half of the year in the second half of 2023, because the effect of the repricing of credit caused by the increase in interest rates will persist.

IMF raises Spain’s growth forecast to 2.5% in 2023

The International Monetary Fund expects that Spain’s GDP will grow by 2.5% this year, well above its last estimate of a 1.5% expansion, the biggest revision of Gross Domestic Product (GDP) in the advanced economies. The IMF says that the improved outlook for tourism will raise the growth of the Spanish economy by one percentage point this year, although it maintains the projection for 2024.

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