Spain’s acting prime minister, Mariano Rajoy, declined a mandate from King Felipe VI to form a government on Friday, forcing a new round of talks next week.
The conservative leader was first in line, given that his People’s Party won the most seats in December’s election.
But it lost its overall majority at the time and the second- and third largest parties had already signaled their intention to vote against Rajoy.
The Socialists, who came in second with ninety out of 350 seats, and the far-left Podemos, with 42 seats, moved closer to an accord on Friday.
Pedro Sánchez, the Socialist Party leader, said his supporters “would not understand that Pablo Iglesias and I would not manage to find an understanding.”
Iglesias, the head of Podemos, recommended a left-wing government in his consultations with the king.
However, the two do not command a majority in either chamber. In the Senate, Rajoy’s conservatives are still in the majority. In the lower house of parliament, the liberal Ciudadanos hold the balance of power.
Ciudadanos leader Albert Rivera said on Thursday that his party was prepared to abstain in favor of either Rajoy or Sanchez to avoid a new election and provide stability at a time when the Spanish economy, the fifth largest in Europe, is recovering from its worst crisis in decades.