Polls suggest no party will win an outright majority in Spain’s election this weekend. For the first time since democracy was restored, the country may need a coalition government.

Provided it’s one between Mariano Rajoy’s conservatives and the liberal Ciudadanos (Citizens), we think Spain should welcome the prospect.

A political duopoly is unhealthy. For more than thirty years, Rajoy’s People’s Party and the Socialists have alternated in power. Corruption and nepotism, while not at Greek or Latin American levels, are too common. When it comes to economic and social policy, the two main parties, for all their campaign rhetoric, really aren’t that far apart.

Reforms

To be fair, the gap has widened in recent years as Rajoy enacted reforms to revive Spain’s moribund economy.

His government made it easier to start a business and reduced corporate tax. It allowed companies to opt out of sectorial bargaining agreements and made it easier for them to fire workers by reducing severance payments.

Together with lower wages, the changes have made Spanish firms more competitive. Exports are up. They now account for 23 percent of economic output against 17 percent in 2007, the last time the People’s Party was in power.

The labor reforms have also helped shrink the gap between often older workers on secure contracts and youngsters who can only get temp jobs with less benefits.

But much remains to be done.

Challenges ahead

One in five Spaniards is out of work. Youth unemployment is almost 50 percent. The economy as a whole is still 4 percent smaller than before the euro crisis.

Rajoy has balked at more thorough reforms and doesn’t seem to be in a hurry to bring Spain’s deficit under the eurozone’s treaty limit of 3 percent.

He has also made a mess of Catalonia’s separatist challenge, ridiculing the region’s bid for independence and refusing to negotiate any changes in its relations with the rest of Spain.

Rajoy’s intransigence, which he wears as a badge of honor, has only made the situation worse. Many Catalans who would be content with a higher degree of autonomy are left with no alternative to independence. In the last regional election, nearly half voted for the separatists.

The Socialists may be more amendable to Catalan demands, but their economic program is a throwback to the pre-crisis years. They want to reverse some of the changes Rajoy has made and would be even slower in bringing spending under control.

Liberal alternative

The Ciudadanos could do better. A middle-class party with roots in Catalonia, it is liberal across the board.

In a coalition with the socially conservative People’s Party, it may not be able to legalize drugs and prostitution. But it could convince the conservatives to cut business and income tax and introduce a single contract to permanently break the divide between casual and permanent labor. This would give young Spaniards hope.

The party also calls for meritocracy in Spain’s public institutions, something which is sorely lacking.

In Catalonia, the Ciudadanos are the biggest opposition party to the ruling pro-independence coalition. They won more votes in September than either the People’s Party or the Socialists. As part of a national government, the party should try to negotiate a settlement that allows its homeland to remain part of Spain without suffering too much interference from Madrid.

Spain hasn’t had a national liberal party for too long. This election is a chance to change that.