Pedro Sanchez and Albert Rivera signed the agreement in Madrid today. | Chema Moya


Podemos today dealt a blow to PSOE - racing to try and form a coalition government following inconclusive elections - when they suspended negotiations with them. Podemos made the announcement after the socialists signed a deal with centrist party Ciudadanos (C's), which Podemos’s Inigo Errejon told a news conference “prevents the possibility of forming a pluralistic government of change”.

Any hope of support from Podemos for Sanchez's hoped-for investiture next week was dashed because of the agreement with the C's. This was now “doomed to failure” by the agreement, Errejon added.

Earlier today, PSOE’s Senate spokesperson Oscar Lopez described the agreement between them and the C's as “a first deal”, adding on Spanish radio that “there are way more groupings that can make (Sanchez’s) investiture possible”.

Sanchez and the C's leader Albert Rivera shook hands to applause after signing the agreement, which centres on what a new government led by PSOE would look like. It includes proposals for major judicial reforms, including changing the constitution to modify rules governing lawmakers’ immunity from prosecution, as demanded by Rivera in return for backing Sanchez. It also puts forward social reforms such as bringing back Spain’s prized universal health care system, which has suffered from major spending cuts over the past years of austerity.

Spain has been faced with political deadlock since December elections resulted in a hung parliament split among four main parties, none of which has enough seats to govern alone. The ruling Partido Popular won the most seats (123) but fell short of an absolute majority. Acting Prime Minister Mariano Rajoy gave up attempts to form a government after he failed to get support from other parties that were fed up with austerity and the corruption scandals.

King Felipe then asked runner-up Sanchez, whose party won 90 seats out of 350, to form a government, but he too has struggled to form an alliance. “It wasn’t easy for the socialist party and Ciudadanos - which have different projects - to be able to put what unites them above what separates them,” Rivera told reporters. Even with Ciudadanos, which won 40 seats, Sanchez still does not have enough votes and will therefore need the backing of other parties - a difficult task as all have conflicting agendas.

Podemos and its associated groupings won 69 seats and would therefore be a valuable partner. But PSOE has been wary of joining forces with a party born just two years ago out of anger over austerity and which ultimately seeks to supplant it.
The two parties are also deeply divided over Catalonia’s independence movement. Although it does not want to see Spain split, Podemos backs the idea of a Scotland-style referendum. Sanchez, however, is resolutely against this. And crucially, Podemos has previously refused to enter a government that would also include the C's, pushing instead for a left-wing coalition with its leader Pablo Iglesias as deputy prime minister.

The PP, meanwhile, has said it will vote against any government it does not lead. Sanchez, therefore, faces an uphill struggle next week to win parliament’s backing for his programme. He needs an absolute majority of 176 in the investiture vote due to take place on 2 March. That is almost certain to fail, leading to another vote 48 hours later, in which he would only require a simple majority. Failing that, the country could be forced to return to the polls by the summer.

As Spain emerges from a severe economic crisis, many say fresh elections would be a disaster for the country, particularly as opinion polls suggest the outcome of a new election would by and large be the same as that held in December. On Tuesday, Spanish business leaders warned that going to the polls again would be an “incomprehensible failure.”