Spain: Regional elections send mixed signals
October 24, 2012
The result of the regional elections on 21 October sent a mixed signal to Prime Minister Mariano Rajoy and his ruling People's Party (PP). On the one hand, the PP widened its absolute majority in Galicia, in what the government labelled as an endorsement of its austerity policies at a national level. On the other hand, the outcome of the vote in the Basque Country showed strong support for nationalist parties. The results come ahead of the 25 November elections in Catalonia - the country's largest regional economy - where the secessionist movement has gained momentum in recent months, with Catalan President Artur Mas pledging to hold a referendum on independence if his party wins the November vote. Some analysts consider that the government's victory in Galicia paves the way for Spain to finally request a full bailout, as the Rajoy administration has been very reluctant to ask for aid prior to the elections for fears of an electoral backlash. That said, yields on Spanish debt, while high, have moderated significantly from the record highs reached at the end of July, therefore granting the government some additional time before making a formal request for help.