In Spain, the ruling People’s Party suffered the worst outcome in regional and municipal elections in more than 20 years. (Source: Reuters, May 25, 2015.)
It used to be the case that the governing People’s Party and the opponent Socialist Party would get the most votes. In 2011, the two parties had 65% of the votes. Today, they are down to just 53%.
Although the People’s Party is still the most voted in most regions, its stance is weakened by the emerging parties Ciudadanos and Podemos. Podemos is an anti-austerity party that was founded in January 2014. It has a strong focus on social security, education, and healthcare. Ciudadanos is a center-left, market-friendly party.
Upon the news, the euro fell 0.2% on average against major currencies.
The old two-party system is facing increasing criticism from the population due to corruption, economic stagnation, and high unemployment rates.
The Spanish are concerned with the country’s economic crisis. The unemployment rate is at 24.4%, with youth unemployment at an eye-watering 53.8%.
Spain also has a 20.4% poverty rate, with 27.3% of the population in or at risk of poverty. Specifically, each day, 120 families lose their homes and 2.3 million children are living in poverty.
Voters are not happy with what the current government has done over the past four years. There have been numerous protests against the Spanish government’s austerity measures.
Anti-Austerity Parties Gaining Popularity in Europe
While these are results from local elections, they can be viewed as a barometer for December’s general election (federal elections). The rise of anti-austerity parties will bring uncertainty not only to Spain, but also across Europe.
Anti-austerity parties have been on the rise in Europe. A few months ago, Greece elected a radical left-wing political party—Syriza. After taking office, the party wanted to renegotiate the terms of Greece’s bailout and the imposed austerity measures with the European Central Bank (ECB), the European Union (EU), and the International Monetary Fund (IMF). Syriza’s rise also brings the question of whether Greece will actually leave the eurozone.
Keep in mind that Greece is not a major contributor to the eurozone’s economy. Its contribution to the eurozone’s gross domestic product (GDP) is a mere two percent.
Spain, on the other hand, is a very different story. The Spanish economy is the fourth-largest in the eurozone, contributing 10% to the region’s GDP. If Spain’s anti-austerity party gains power in the general elections and follows the footsteps of Greece’s Syriza, there will be a significant increase in risk in the eurozone and across the global economy.