Spain has held two national elections in six months, and may be heading for a third. As we went to press, Prime Minister Mariano Rajoy appeared unlikely to secure enough votes from MPs to be able to form a majority. There is hung parliament with four parties jostling for position.
So far, Spain’s recovery has kept going, with GDP expanding by 0.8% in the second quarter. The government is pencilling in growth of 2.9% this year. But “it can only be a matter of time before political uncertainty feeds through into economic performance”, says the FT.
And if there is no progress soon, Spain is likely to miss a September deadline to pass a budget for 2017, which could fuel concern over the government’s ability to keep a lid on spending. Spain is another potential headache for the eurozone.