Showing little worries about the political deadlock, Spaniards named the high jobless rate and corrupt politicians as their main concerns, leaving the lack of government only fifth. It comes as no surprise, considering the political-economic setting that has prevailed over recent years, that polls show major distrust in political forces by the people of Spain. Some go even further to claim politicians have let them down immensely, and that the country is better off without a government. And the recently blossoming governmentless economy stands on their side. So does Spain even need a government?
© Trading Economics
While the economy is doing well for now, experts claim the gauges deceptive, and point to some dark clouds if the deadlock prevails. Policies targeting long-term economic health are not being enforced and no legislation is being passed. Uncertainty on the budget as well as fiscal and monetary policies for 2017 damages investor confidence. Furthermore, although Spain has met its 100% debt-to-GDP target, the European Union has threatened to impose sanctions if budget deficit is not curbed to the allowed 3% level. Due to lack of constraints, the number keeps on rising and is expected to show 4.9% this year and 3.6% next.
Parallels between the 2010 Belgium government crisis and current deadlock in Spain are drawn to remind that the circumstances are anything but unique. The Belgian general election left all parties with less than 20% of seats, leading the country to match a 353 day "no-government" record previously held by Cambodia (2003). While the Belgian economy did not show staggering economic growth, it managed to float through the chaos rather steadily.
© Trading Economics
Nevertheless, Monday came with news of Mariano Rajoy as the new Prime Minister, along with a freshly established Spanish government. While it is now clear that there will be no third tie between Spain Belgium and Cambodia, uncertainty still remains as Rajoy embarks on administering the most fragmented parliament in Spanish history. It remains unclear whether legislation will be passed successfully, as opposition forces could make the newly formed government unable to govern.