Either or

European Commission vice-president Valdis Dombrovskis revealed what he wants for Christmas - a stable government for Spain

Mark Nayler

Friday, 29 November 2019, 12:09

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Speaking on Wednesday, European Commission vice-president Valdis Dombrovskis revealed what he wants for Christmas - namely, that Spain has a stable government for the start of 2020, specifically one able to pass new budgets. Latvias former prime minister also said that he expects the next Spanish administration, whenever it arrives, to reduce the countrys bloated public debt (which currently stands at 97.6% of GDP), in line with the content of a letter the Commission sent Madrid a few weeks ago. But if Socialist leader Pedro Sánchez and Unidas Podemos (UP) president Pablo Iglesias head up the incoming government, as per the tentative coalition deal they struck last week, both Dombrovskis wishes are unlikely to come true at the same time.

First of all, one has to think about what stable means in the wider context of modern Spanish politics. As Dombrovskis implied, a very basic test of any governments functionality is whether it can formulate and pass a new budget every year (forget, for now, any more lofty definitions, such as steering a country out of a constitutional crisis, or improving social inequality or problematic levels of unemployment, especially among Spains youth).

Using this definition, Sánchezs previous administration, which sat on just 82 of the 350 seats in congress, was far from stable: in fact, its failure to pass a spending plan for 2019 prompted the April 28th election, which in turn gave way to the vote held on November 10th. Pablo Casado, leader of the conservative Peoples Party (PP), called the levels of expenditure contained in the proposed budget suicidal.

Given that theyre both left of centre and jointly opposed to the PP and far right Vox, Sánchezs Socialists and Iglesias UP have plenty of ideology and policies in common. But UP tend to lean further to the left of the Socialists on economic issues, and will push for higher levels of public spending than even Sánchez - whos hardly tight-fisted when it comes to the welfare state - is comfortable with.

Indeed, Podemos rose to prominence with a strong anti-austerity message, presenting itself as the only party that could radically improve the lives of the disadvantaged and vulnerable. No surprise, then, that Iglesias wants a further raise on Spains minimum wage, which the Socialist leader has already increased by a substantial 22% this year.

Even if a profligate PSOE-UP coalition materialises and confirms to Dombrovskis definition of stability, itll have a tough time reducing Spains structural deficit by 0.65% of GDP (as per the EU s most recent stipulation) as well as its public debt. Should Sánchez and Iglesias take the helm of the next Spanish government, the Commission will probably have to settle for stability alone (providing even that requirement is met) - because it will be one more committed to spending than to saving.

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