the euro zone


For the last few years, leftist party Podemos has been a fairly dependable ally of Pedro Sánchez's Socialists. But there are signs that that is changing: it's as if, with regional elections due across Spain this spring, Pablo Iglesias' party wants to remind potential voters of its far-left credentials and, in doing so, of its ideological differences with the centre-left PSOE (recently, the focus has been on policies about which the two agree).

There was further proof of this on Tuesday, when the party declined to support a housing bill proposed by Sánchez's government. Designed to make rental costs more accessible in major cities such as Madrid and Barcelona, the decree didn't impose sufficient price caps, said Podemos. As Spain's Socialist government approaches potentially fraught budget negotiations, in which Podemos' support will be crucial, it was an ominous sign.

Podemos did vote for other measures proposed by the Socialists in Tuesday's parliamentary session, though, and helped draft most of the delayed 2019 budget with Sánchez last autumn. But there are already indications that its support for this crucial spending plan - likely to make or break Sánchez's stint in Spain's highest office - will not be as robust as the PSOE leader could wish for. Podemos deputies say they have already identified several points which deviate from agreements made with the Socialists late last year.

This week also saw the resignation of Podemos number two Íñigo Errejón. Errejón, who has directed Podemos' most successful electoral campaigns, announced on Monday that he is stepping down from the party and running for the presidency of the Madrid region in May's elections, on an open ticket with the capital's mayor Manuela Carmena. His departure hints at internal problems within Podemos and supports the theory that in losing - or pushing out - a high-profile lawmaker who was more moderate than Iglesias, Podemos is looking to reconnect with its leftist roots.

Indeed, this time two years ago, an open battle between Errejón and Iglesias threatened to pull their party apart. In early 2017, after months of infighting among the Podemos ranks, Iglesias finally saw off a leadership challenge from his number two, consolidating his position as Secretary General with 89% of the party's votes.

But the rift exposed differences between the two men that have clearly proved irreconcilable. Errejón is less crusading and more pragmatic than Iglesias: he was critical of the Podemos leader's decision, in June 2016, to run on a joint ticket with a left-wing coalition that included the Spanish Communist Party, and he has favoured closer collaboration with the PSOE to achieve greater clout in congress. It seems no coincidence that he's stepped down from Iglesias' party as it tries to re-establish its leftist credentials - a repositioning that may spell trouble for Sánchez's PSOE.