The Spanish people are going to the polls today in a milestone election that will see more than two parties compete for power for the first time in thirty years.
The election raises the possibility of the advent of either a new era of consensus politics or a period of instability and the election outcome is the most uncertain in the 40 years since the end of the Franco dictatorship and the return of democracy.
Rajoy's Partido Popular (PP) and the Partido Socialista Obrero Español (PSOE) have dominated the government for decades but the picture is about to change with the emergence of two new parties-- the left wing Podemos – Spanish for 'we can' – and the centrist Ciudadanos, which translates as 'citizens'.
Over the last few years, Mr Rajoy's administration adopted austerity measures and job reforms that despite their unpopularity have been credited with returning the Spanish economy to growth after years of adversity brought on by a series of harsh financial crises and corruption scandals that damaged the reputation of the PP. Unemployment remains high. In October 2015, the unemployment rate came in at 21.6 percent compared to 23.9 percent a year earlier, the second-highest rate in the EU after Greece, although it has fallen from its 2013 peak of 27%.
Catalina’s Independence
The central government in Madrid has also had to deal with an attempt by Catalonia to break away from the rest of Spain. The Pro-independence parties there won an absolute majority in regional elections in September and the motion to begin the process of declaring independence was passed a month later. Spain's Constitutional Court, however, revoked that motion.
Analysts believe Spain is going through an unprecedented period of political change and while the PP are expected to win the election, they may well lose their outright majority, with a minority or coalition government as possible outcomes.
According to one political expert, Spain's election is seen as the most important one in southern Europe since the end of the eurozone crisis in late 2012 and that even if the left were to return to power, which is highly unlikely, the ECB's asset purchase program would ensure that any post-election sell-off would be relatively mild. Should Spain consider changing the course of future reforms, it would be received badly by global markets.
Polls are showing that PM Rajoy's PP is narrowly ahead and that the conservative PP currently has a majority in Spain's lower house of parliament. An inconclusive election result — one that gives no single party a majority in Parliament — could open the door to a "coalition of losers" taking power, as recently happened in neighboring Portugal.
Should a lack of majority occur, King Felipe VI, according to the Spanish Constitution, will invite a party leader to form a government. If the second- and third-placed parties join together and have more parliamentary votes than the winner, the monarch could nominate them instead of the victor.
This would entail a strained period of postelection negotiations ending with the nominated party leader winning a vote of confidence in Parliament to take office. If the issue is not resolved after two months, a new election is called.
Polling stations are open from 9:00 local time (8:00 GMT) until 19:00 GMT. Exit polls are expected minutes afterwards and complete results are due two days later.