Spain: Conservative People's Party (PP) wins landslide election
November 20, 2011
On 20 November, Mariano Rajoy's conservative People's Party (PP) celebrated a landslide victory in the general election, winning 186 of the total 350 seats, the biggest parliamentary majority in almost 30 years. The ousted Socialist Party (PSOE) secured only 110 seats, which was well below the 169 seats won in the 2008 elections. The new government faces the challenge of cutting the fiscal deficit without further boosting unemployment, which is already the highest in the Euro area. The fiscal deficit is likely to exceed this year's target of 6.0% of GDP and will have to be cut further to 4.4% of GDP in 2012. In his acceptance speech, Rajoy advised Spaniards to ?brace for hard times?, but avoided giving any details of how he will slash the budget deficit. Markets have already put pressure on the newly elected president to unveil budget plans. On 28 November, Spain's 10-year bond yield rose to 6.5-%, which pushed the gap between Spanish and German borrowing costs to 46- basis points.