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Spain: Risks to produce a new government – RBC CM

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 2, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    Elsa Lignos, Senior Currency Strategist at RBC Capital Markets, suggests that following weeks of political wrangling after inconclusive elections in December, the Spanish Congress will hold an investiture vote on the candidacy of PSOE leader Sanchez.

    Key Quotes

    “So far, the PSOE has secured the support from centre-right party Ciudadanos, but together the two hold only 130 seats of 350––well short of the absolute majority needed in the first round. It is therefore likely that a second vote (to be held 48 hours later) will be needed.

    Here Sanchez would only need to secure a simple majority, but this would in turn require either the PP or Podemos to abstain, something which neither party has shown an inclination for at this stage.

    We therefore see a risk that both rounds fail to produce a new government next week, which would in turn leave only two additional months for further negotiations, after which a new election would have to be called. EUR is entirely indifferent to political developments in Spain and there is no reason for that to change in the short term.”
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