King Felipe today met the leaders of PSOE and Podemos, Pedro Sanchez and Pablo Iglesias. | Pool

Prospects of a left-wing coalition government in Spain came closer today as PSOE (socialists) and anti-austerity Podemos agreed to seek a deal to break a political deadlock caused by an inconclusive parliamentary election. Such a combination remains uncertain but, after the leaders of both parties met King Felipe, it appeared far more likely than a centre-right/centre-left coalition proposed by acting Prime Minister Mariano Rajoy, whose Partido Popular polled the highest at the December election.

“Spain can’t afford to wait for Rajoy,” Podemos leader Pablo Iglesias told a news conference after the meeting. “We will talk of governments, teams and tasks (with the Socialists) and we will not debate with any red line”.

Rajoy, whose conservative PP party fell far short of an outright majority, is still expected to be invited to form a government by the King. But most parties have already said they would reject Rajoy in an investiture vote that, whoever is put forward as candidate for prime minister, will trigger a two-month deadline for the formation of a government. The ticking clock will also increase pressure on Pedro Sanchez (the leader of PSOE), who would get the next shot as candidate, as a new national election would likely have to be held in May if he also failed to obtain a majority of parliamentary support.

Sanchez reiterated that PSOE would vote against Rajoy and said they would try to reach a deal with Podemos and other smaller groups to obtain a majority of “progressive forces”.

“We will wait for Sr. Rajoy to present himself and if he fails, the socialist party will do what it needs to do to form a government of change,” Sanchez told a news conference. “Socialist voters would not understand that Pablo Iglesias and I would not manage to find an understanding.”

In December’s election, PSOE and Podemos won a combined 159 seats. That would put their coalition some way short of a majority in the 350-seat legislature, meaning they would also need several smaller leftist parties to agree on a joint programme as well as backing from regional groups from the Basque Country and Catalonia. A major sticking point so far has been Podemos’s promise to allow an independence referendum to go ahead in Catalonia, which the Sanchez rejects.

But the two parties have softened their respective stances on that issue and insisted they preferred to focus on economic and social questions, with Iglesias stopping short of calling again for a plebiscite.

December’s election resulted in a fragmentation of Spain’s political landscape unprecedented in the four decades since the country’s return of democracy. The PP and PSOE, who have alternated in power over the last 25 years, came first and second with greatly reduced support while Podemos and a second newcomer party, centrist Ciudadanos, attracted significant support underpinned by a new generation of voters disillusioned with the old elite.

If Sanchez fails to be voted in as prime minister, it is not clear yet whether Rajoy would try again or the parties would directly seek a new election within the following two months.