An Artificially Polarised Election: General elections in Spain

An analysis of the economic programmes presented by the central parties in the Spanish General Election, the PSOE and the PP, demonstrates that their perspectives of the current situation are not entirely irreconcilable.

Furthermore, foreign institutional investors seem not to be overly concerned about the outcome. Regardless of whether the PSOE remains in power or the PP takes control, they believe that Spain will remain a “very attractive” country for investment. Data shows that investors have had a mostly positive experience with Pedro Sánchez in power, and they don’t think this would change much even if the conservative PP were to come to power. In fact, a significant portion of the respondents say they would prefer a government led by Alberto Núñez Feijóo.

Intense polarisation in Spanish politics during the past four years has had a deep impact on the Spanish electoral campaign. Amplified by the media, this tension has spread to different areas of society, creating the impression of two antagonistic blocs: Spanish Socialist Workers’ Party (PSOE)-Sumar and People’s Party (PP)-Vox.

The mix of far-left and far-right parties within these two blocs only increases the sense of socio-political divergence. However, a detailed analysis of the economic programmes presented by the central parties, the PSOE and the PP, demonstrates that their perspectives of current situation are not entirely irreconcilable. Despite this, more significant differences between the parties can be observed in other areas, such as social or territorial issues.

Depending on the outcome of the election, there is a risk that either of the two major parties may be forced to implement very different economic measures due to the political influence of their partners. However, it is unlikely that either of the parties would hand over significant ministries, such as finance, energy or industry, to Sumar (far left) or Vox (far right).

One reason for the current centrality in major economic policy is the imposition of fiscal compliance rules by Brussels. The major parties do not often acknowledge the European Commission’s influence on decision making about the national economy, but it is evident that the transfer of sovereignty to Brussels is becoming increasingly significant.

This is especially true now, as Spain is set to receive the first instalment of a €140 billion investment from the European Recovery Fund,
which runs until 2026.

This groundbreaking level of investment, which has the potential to transform green and digital industries, comes with conditions agreed upon with the European Commission regarding compliance with deficit and public debt figures and will heavily influence the economic actions of the government that emerges after the elections.