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THE EURO ZONE

Which direction?

Here in Andalucía, the political landscape is undergoing seismic changes. Following the region's elections on 2 December in which the incumbent Socialists (the PSOE) took a heavy hit, Ciudadanos and the Popular Party (PP) made a deal which saw them take control of the Andalusian parliament's speaker's committee last week. Ciudadanos' Marta Bosquet is now the new speaker of the regional government and it's likely that the PP's Juan Moreno will become Andalusian president later this month.

Although a triumph for the Spanish right (Andalucía has been a Socialist heartland for decades), the Ciudadanos-PP deal will sound alarm bells for the country's left, especially for prime minister Pedro Sánchez. On 26 May this year, there will be local, municipal and European elections in Spain, prompting one to wonder if the changes in Andalucía will be replicated throughout the country. There is also the far-right group Vox to think about: after supporting the Ciudadanos-PP deal last week, they're set to become a powerful force in Andalucía and, if they do well on 26 May, all over Spain.

A world of uncertainty is contained in those last few sentences, but one thing seems clear. If some combination of the PP, Ciudadanos and Vox becomes the next Spanish government, whether in 2020 or following an early general election this year, there will be a marked change of economic direction from that being pursued by Sánchez's PSOE.

The prime minister's proposed 2019 budget - which has yet to be passed - has been criticised by PP leader Pablo Casado, who has called its raft of expensive welfare policies "suicidal". One way in which the Socialist leader proposed to fund them was with higher taxes, both on individuals and corporations - a move which is opposed by all of the right-wing parties set to take control of Andalucía. Vox, in fact, proposes eradicating inheritance, estate and capital gains taxes altogether.

Thinking of a possible shift in economic direction for Spain, though, gives rise to the thought that such a change might only be theoretical. This is because the current Socialist administration can't actually pass any economic legislation. Indeed, Sánchez's profligate budget remains a draft document even as we enter the year it's supposed to cover: his minority government holds just 84 seats in the 350-seat congress and cannot secure approval for the spending plan.

The Socialists' recent loss of power in Andalucía serves to highlight just how precarious their position has become. If Sánchez can't secure his absurdly delayed budget's approval in a parliamentary vote scheduled for later this month, he ought to call a general election before his term expires in 2020. And if that happens, 2019 is set to be a tumultuous and fascinating year in Spanish politics.