MADRID (Bloomberg) - Spaniards head to the polls on Sunday (Dec 20) for the tightest election since the return to democracy, with four parties in the running and no clear majority in sight.
The election will show how much life is left in the two- party system that saw Prime Minister Mariano Rajoy's People's Party (PP) and its traditional rival, the Socialists, alternate in power for the past 33 years. After a six-year economic slump and a raft of corruption allegations against both main parties, two new groups - pro-market Ciudadanos and anti-austerity group Podemos - have emerged to challenge the status quo.
"We're going to get a snapshot of just how badly hurt the two party system really is, and see whether the new parties can take over the establishment, or are simply part of a supporting cast," Antonio Barroso, a London-based political analyst at Teneo Intelligence, said in an interview.
More than 36 million Spaniards are eligible to participate with 350 parliamentary seats up for grabs. Voting will start at 9am (4pm Singapore time) and close at 8pm local time. Exit polls will give the first indication of the outcome as soon as the ballot booths close and results will start to come in shortly afterward.
What shape of government will emerge from that process is far from clear.
Rajoy is limping toward the ballot, the 45 per cent support he commandeered in 2011 cut to as little as 26 per cent in the final polls. He's asking voters not to put the economic recovery at risk and warning of the dangers of a pact between Podemos and the Socialists.
'Wind of Change'
The traditional parties have been tainted by corruption allegations and economic mismanagement that have intermittently blighted Spain since its return to democracy in 1978. They've seen the unemployment rate soar over 20 per cent three times in 30 years and failed to fix the divisions between temporary and permanent jobs in the labour market.
Officials linked to both parties were at the heart of the savings banks system that collapsed during the financial crisis, bringing the economy to its knees.
Podemos and Ciudadanos have tapped into voters' frustration in different ways. Podemos calls for the end of an elitist system while Ciudadanos is aiming to make Spain more competitive and more transparent. Neither have experience of governing at a national level.
"A wind of change is blowing in Spain, traditional parties are likely to be challenged and could well lose their dominance," said Geoffrey Minne, an economist at ING Bank in Brussels.
"It is likely that a fresh approach could lead to important changes in the political system, and notably on the accountability of the government."
A Gesop poll published by El Periodic d'Andorra Thursday, showed the PP on 26.2 per cent with the Socialists in second place with 21 per cent. Podemos was on 20.4 per cent pushing Ciudadanos into fourth place with 15.9 per cent.
Throughout the campaign, 60-year-old Rajoy has repeatedly said the most voted party should take the lead when it comes to forming a government, warning against a grand coalition of "losers" invoking the Portuguese election in October, where a left-wing alliance ousted the conservative government, which had the most votes.
Without a clear victory, the People's Party will surely need an ally in government. The Socialists and Podemos have made it their mission to oust the PP from government, while Ciudadanos's leader, Albert Rivera, has repeatedly said he won't enter a formal coalition if he's not prime minister.
However, the 36-year old has said it is important for Spain to remain a stable country and keep populists away. In a Dec 18 interview, Rivera hinted that he'd offer some form of support to the PP rather than see an alliance including Podemos take power.
Economists surveyed by Bloomberg News this month said the best outcome for Spain would be a PP government supported by Ciudadanos. Fourteen of the 20 respondents said that combination would offer the best long-term prospects for the economy.