Spain’s traditional parties did poorly across the country in municipal and regional elections on Sunday. Populist leftwingers and a liberal Catalan party benefited from the disillusionment in national politics.

According to early projections, Prime Minister Mariano Rajoy’s conservative People’s Party went down 10 percent from the elections four years ago to 27 percent support nationwide.

It still won nine out of thirteen regional contests but is unlikely to be able to govern on its own in most parts of the country.

Fatigue

Politico reports that the setbacks reflects “fatigue with years of economic austerity pushed by Rajoy, even as the Spanish economy has rebounded.”

The government expects 2.9 percent growth this year while unemployment is finally coming down, helped by labor reforms enacted in 2012.

But almost five million Spaniards, representing a quarter of the workforce, is still unemployed. Youth unemployment, at 50 percent, is the highest in Western Europe.

Corruption scandals involving leading figures in Rajoy’s party also took their toll.

Rajoy’s failure

El Mundo, a right-wing daily, is unforgiving in its editorial, saying the People’s Party’s defeat showed the failure of the “discourse, strategy and party model imposed by Mariano Rajoy.”

The newspaper predicts that the party will do worse if it insists on an “outdated argument of economic recovery,” which is seen by many as “coldness toward the more than five million Spaniards who are unemployed and the many more who are suffering the consequences of low salaries.”

Split in two

Writing in the same newspaper, Pedro G. Cuartango argues that Spain has been split in two with the countryside and towns backing the conservatives and the larger cities going to the liberals or the left.

Spain turned to the left in the big cities, indicating that the urban and professional classes have turned their backs on the government of Mariano Rajoy.

In several regions where they won a plurality of the votes, the conservatives could still be forced out of office by alliances between the mainstream Socialists and smaller left-wing parties.

Blaming the Socialists

Spain is not used to coalition governments. Rajoy’s People’s Party and the Socialists have alternated in power since democracy was restored in 1975.

The Socialists came in second on Sunday, despite losing support for the second regional election in a row. They won 25 percent support, down from 28 percent in 2011 and 35 percent in 2007.

Many still blame the Socialists for Spain’s economic predicament. The party presided over a housing bubble and an explosion in public spending in the years leading up to the financial crisis and was then slow to react, running a fiscal deficit as high as 11 percent of economic output. The national debt rose from 36 to 70 percent of GDP in 2011.

Winners

The winners on Sunday were the centrist Citizens party from Catalonia and the radical anti-establishment movement Podemos, both of whom now find themselves in the position of kingmakers across Spain.

Podemos, which models itself on Greece’s ruling Syriza party, shocked the Spanish establishment when it reached 30 percent support in the polls earlier this year. Its popularity has since come down, but Sunday’s elections showed it will likely remain a force going into the general election later this year, anyway depriving the Socialists of the chance to unseat Rajoy on their own.

Many dissatisfied, especially urban voters have switched to the Citizens, once a small party from Catalonia that opposes independence for the region. It is increasingly seen as a sensible and graft-free alternative to the traditional two parties.

Liberal reformers

The Economist argued before the election that Spain’s older parties had only themselves to blame for their woes.

Rajoy’s government has not reformed enough and it bungled the corruption issue. The Socialists have neither acknowledged their own failures in government between 2004 and 2011, nor found a way to channel the righteous anger of the indignados. Neither party seems to have the will to tackle the inefficiencies and injustices that mar Spain’s public sector, from over-numerous municipalities to politicized bureaucracies.

The Citizens call for liberal economic reforms, including corporate and income tax cuts as well as simpler immigration policies to attract foreign investors and workers.

They also want to abolish or merge municipalities with under 5,000 residents.

Leader Albert Rivera told the Financial Times earlier this month that the Citizens share Podemos‘ outrage over the traditional parties’ inability to lift Spain out of the crisis. But he said the far left’s calls for bigger government are outdated.

Podemos channels people’s anger — and people are very angry. But I think what is happening now is that people are saying, “OK, I am angry but now let’s get to work.” People have moved on from simple anger.

Far-left policies

A closer look at Podemos‘ economic policies may also have scared away moderate voters.

The group wants to nationalize industries, stop profit-making companies from laying off workers and create more jobs in the public sector, financed by higher taxes.

They also want to give every Spanish citizen a basic income, something the country couldn’t possibly afford, while Podemos‘ views on Spain’s membership of the euro are worryingly ambiguous.

Old politics

Podemos seems to recognize the liberals as a threat and alleges they are more of the same.

Politico reports that one of the party’s candidates, Alberto Egido, recently said, “We know already how the old politics works — with parties that disguise themselves as being new. But if we scratch on the surface, we see the tics and the acting of the old parties.”

That seems unfair, but the Citizens’ trepidation could make Spain more difficult to govern.

The party refuses to go into coalition, preferring to support governments on an issue-by-issue basis. That keeps the Citizens’ hands clean but will in most cases lead to Socialist administrations, propped up by Podemos and others, pursuing policies that are the opposite of what the Catalans want.

If they are to have a liberal influence on Spanish politics, the Citizens must not be afraid to work with Rajoy’s People Party, which is ideologically closest to them — even if it gives Podemos ammunition to claim they’re as bad as the rest of them.