Halister News

(Bloomberg) -- While Pedro Sanchez resigning from Spain’s Socialist PSOE party clears the path for Spain’s acting PM Mario Rajoy to form a government, events this week will be key, Teneo analyst Antonio Barroso says in interview.

• There’s a debate about whether fresh elections would make Rajoy’s PP’s position stronger and mean he only needs the support of Ciudadanos to form a government
• And he may be weighing the fact that if he doesn’t call for elections it may be very difficult for him to govern
• This is still unresolved because there’s a risk new elections would backfire if the process isn’t managed carefully
• A Rajoy-led government is a question of when, not if; the prospect of a government including leftist Podemos party has been avoided
• That said, will still be a fragmented parliament and Spain won’t be implementing huge structural reforms; negotiations over the budget and for any reforms will continue to be tough
• Even if PP and Ciudadanos parties come together to form a government, there’s no guarantee the junior partner would back everything Rajoy’s party wants to do; Ciadadanos could choose to work with PSOE to block certain policies
• NOTE: Spain Socialist Party Revolt Not Yet a Reason to Buy SPGBs, Rabobank analysts said earlier