Spain’s conservatives rolled to victory on Sunday in a parliamentary election that ousted one of the few remaining socialist governments in Europe. Mariano Rajoy’s People’s Party secured a majority in the Congress of Deputies, its largest ever.
With nearly all of the votes counted, the People’s Party was set to win 186 out of 350 seats in the lower chamber of parliament.
With one out of five workers unemployed and Madrid’s fiscal projections closely watched by international bond markets as Europe’s sovereign debt crisis unfolds, the opposition conservatives were expected to win but not by a landslide.
Incumbent prime minister José Luis Zapatero had to implement unpopular austerity measures when Spain seemed on the brink of being drawn into the continent’s spiraling debt crisis this summer. He froze public pensions, cut government salaries, raised the retirement age and trimmed union bargaining rights to the dismay of traditional left-wing constituencies.
In May, the socialists were crushed at regional polls when they won less than 28 percent of the vote nationwide. That election followed a downgrade of Spain’s credit rating. Interest rates on Spanish bonds currently hover around 7 percent, a rate deemed unsustainable in the long term.
The People’s Party returns to government after almost eight years of socialist rule but Rajoy, expected to become prime minister in December, hasn’t detailed where he will find further spending reductions. He does champion business tax cuts to stir economic growth. Recent projections have Spain’s economy expanding by a mere 0.2 percent this year.
“I’m prepared to do what Spaniards want,” Rajoy said after he voted in Madrid on Sunday. He urged voters not to expected “miracles” later that day but promised not to cut pensions.
Other conservatives have been more adamant. “The measures will be tough and we will have trouble with a lot of people,” predicted one party leader in August, “but people will have to understand that we lived beyond our means. Spaniards will understand.”
After joining the European Union in 1986 and the euro in 1999, Spain enjoyed years of prosperity but part of its newfound wealth was driven by a boom in real estate and cheap credit. When the property market crashed in 2007, many Spaniards found themselves over their heads in debt.
Household borrowing nearly tripled between 1996 and 2005 from €200 to €595 billion which, at the time, equaled almost 75 percent of the nation’s gross domestic product. It doubled between 2002 and 2009 from accounting for roughly 45 percent of disposable income to more than 90 percent. In Germany, by contrast, debt to disposable income ratios actually decreased during the same period from 66 to 57 percent.
On social policy, the Spanish conservatives aren’t considered likely to roll back liberal reforms enacted during Zapatero’s administration, including the legalization of gay marriage.