Spain's Prime Minister Pedro Sanchez holds a news conference after an extraordinary cabinet meeting in Madrid.

15-02-2019JUAN MEDINA

Spanish Prime Minister Pedro Sanchez has called a snap national election for 28 April, after losing a key budget vote. Sanchez took office in June last year after the previous conservative government was ousted in a no-confidence vote.

Sanchez, who has led a minority government since June last year, could theoretically try to cling on until the mid-2020 end of his term, seeking an ad-hoc majority on each piece of legislation. But after the budget vote, where the socialists lost the support of Catalan nationalists who helped bring them to power, that looks difficult, and the government would have limited room for manoeuvre, finance minister Maria Jesus Montero says. It could well take months before the next prime minister is known, and there is no guarantee the party with most votes will be in government.

Polls vary quite a lot but all show that no single party could form government on its own, and that a majority will likely require several parties. That would confirm the end of the two-party system that dated from Spain's return to democracy in the late 1970s and which started unravelling in 2015.

Sanchez's PSOE are leading in polls, with estimates from the last few months averaging at 24 per cent, according to a poll of polls by El Pais.

The Partido Popular and centre-right Ciudadanos would not be far behind and could theoretically form a coalition with the far-right Vox, as they did in the Andalusia region in December, but even that is not guaranteed.

PSOE and Podemos would not on their own have enough seats to govern, according to opinion polls, and one question would be whether Ciudadanos could end up preferring an alliance with the left than with the right.

Another factor adding to the likelihood that things will take time are the 26 May local and regional elections: parties will likely not want to strike a deal in Madrid that could jeopardise the chance of local coalition agreements. Adding to uncertainty is the fact most parties are either undergoing internal crisis or have new leaders, meaning much can still change in strategy and alliances.

Catalonia's independence drive has irritated many and will be a key factor, especially at a time when twelve of its former leaders are on trial. The PP, Ciudadanos and Vox are competing for the voices of those upset with separatism, but PSOE, after refusing to give in to Catalan demands to secure their backing for the budget, will also aim to use the issue to their advantage.

With the rise of Vox and PP also veering to the right, PSOE will try and mobilise voters against the far-right and over issues ranging from women's rights to symbolic issues such as the removal of former dictator Francisco Franco's remains from the grand mausoleum at the Valley of the Fallen.

With the economy forecast to grow about 2.2 per cent this year, it will not be the dominant factor, but issues such as how to regulate the rental market could matter.

For one thing, Spain has not had a majority government for over three years - with a succession of minority or caretaker governments - and that has meant many structural reforms have been delayed.

While PSOE have managed to adopt a series of measures over past months that include an increase in pension and minimum wages, the rolling-over of the 2018 budget means a number of spending plans will not enter into force.

Montero says that this means the deficit could rise to between 2.2 per cent and 2.4 per cent instead of the 1.3 per cent targeted by PSOE.