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A few personal observations ahead of the Spanish elections. A thread 👇 (1/n)
Barring a major upset, the Socialist Party looks set to win comfortably. This is a major win for PSOE if we look at the struggles the party has been through since the financial crisis and the sorry state of social democrat parties across Europe (2/n)
Conversely, this is a historically bad result for the Popular Party. Failure to break the 100-seat threshold would be catastrophic. PP is bleeding votes left and right to Ciudadanos and Vox and needs to come to terms with the new reality of their diminished role (3/n)
This is something PSOE already went through in recent years given the surge or Podemos and its own decline. While Podemos never fully succeeded in his “assault to heaven” as they intended, they now have left a firm footprint on Spanish policy making (4/n)
An interesting side fact to note is that the parties that emerged in 2015 and were destined to change Spanish politics, Podemos and Ciudadanos, are now tanking in tandem in the polls (for very different reasons) (5/n)
Polarisation in Spanish politics, mainly coming from the Catalan independence conflict, means the old left-right divide is more virulent than ever. Emergence of far-right Vox is best example of this, but also see the PSOE’s unashamedly shift towards more leftist positions (6/n)
This also means that big intra-bloc rivalries of recent years have taken a back seat to bigger things. Podemos does not aspire to surpass PSOE anymore, and a coalition between the two is seen as a given, something unthinkable not long ago (7/n)
Similarly, on the right, Ciudadanos abandoned any pretence of centrism when it vetoed PSOE as potential partner and now walks hand in hand with PP in most major issues. PSOE+Podemos and PP+Ciudadanos are now de facto coalitions despite some internal tensions (8/n)
What does this mean? If PP, Ciudadanos and Vox get enough votes we will have a right-led government. As Andalucia showed, PP and Cs will happily use Vox to oust Sanchez even if optics look bad. Public statements to the contrary are mere posturing (9/n)
On the left, things look even more complicated. PSOE and Podemos won’t get enough votes, so they will need some of the smaller parties to cooperate. In a best-case scenario for the Socialists they would only need Basque PNV, and that would be tricky already (10/n)
But most likely they would need support from Catalan parties: BIG PROBLEM. Even their abstention would be a tall order, and even if it were to happen, the reputational damage to Sanchez would be massive. We would see 4 years of constant pummelling from the right (11/n)
As polls stand, there is a substantial risk that both blocs on the left and right end up on the 160-seat range and no government can be formed. Although very early in the game, I think we could easily put probability of a second election at 50% (12/n)
The good news is, financial markets seem completely unfazed by all of this. Yields on Spanish debt are not moving at all by the increase in political uncertainty. Markets think Spain will be fine just as it has been in the past few years (13/n)
MAJOR CAVEAT 1: All my comments are based on current average of polls, but there is a high degree of uncertainty. Calculating final seats gets even more complicated given Spanish electoral system (14/n)
MAJOR CAVEAT 2: Polls have been rather unreliable ever since Ciudadanos and Podemos emerged in 2015. The unexpected surge in Vox makes them even more unreliable as polls struggle to adjust between reported answers and actual voting intentions (15/n)
MAJOR CAVEAT 3: Similarly, the historic collapse of PP in the polls could be reflecting hidden voting intentions. My own intuition is, if polls prove to be significantly wrong it will be by having underestimated support for PP (16/16)
