Municipal election results, % of total votes

Despite the PP’s strong performance in municipal elections, it is highly unlikely that the party will be able to obtain an outright majority in the snap elections

We continue to expect a PP-Vox coalition as the most likely outcome of the snap elections on July 24. The elections are likely to be closer than expected, however, and a surprise return of the PSOE is possible. Still, under our base case, MNCs are likely to see an increase in political uncertainty and more antagonism between local authorities and Madrid. Additionally, Vox’s participation in the central government may revitalize independence movements in the north, but a repetition of the events of the 2017 Catalonian independence referendum remains highly unlikely.


  • The ruling coalition was decimated during Spain’s municipal elections on the 28th of May.
  • Senior coalition partner PSOE saw its vote fall to 28.1% from 29.4% in 2019.
  • The main opposition party, the PP, increased its share of the vote by nearly 9.0% to 31.5% on the back of a significant fall in support for other left parties, including junior coalition partner, Podemos.
  • Far-right party Vox managed to secure 7.2% of the vote, raising the prospects of a PP-Vox coalition.
  • In response to the poor election results, PM Pedro Sanchez called for snap elections on July 24.

Our View

Originally scheduled for Q4 2023, Sanchez’s announcement has raised the political stakes, especially in light of the fact that Spain is due to take over the rotating EU presidency on July 1. While Sanchez has spent a considerable amount of effort to raise his profile abroad, domestically he has become an increasingly divisive figure in the aftermath of a series of scandals, including a botched attempt to pass a sexual consent law, reliance on pro-independence parties, and a close alliance with the far-left Podemos party. The snap election announcement likely represents an effort to minimize the PSOE’s ongoing fall in popularity and shift budget planning onto a potentially new ruling coalition.

While the government is projecting a 3.9% deficit in 2023 and is planning a 3.0% deficit in 2024, budget planning for 2024, which was supposed to take place prior to the general elections, will likely involve unpopular decisions, especially in light of the ongoing anti-inflation measures. The latter will also likely complicate the PP’s fiscal program, which involves reducing the tax burden and housing pressures on families. Announcing snap elections also likely seeks to recreate the success of the Portugal socialists in 2022, who won on the back of increasing concern that the ruling coalition would involve far-right parties. Given the fact that the PP did not manage to win an outright majority and large urban areas, and the outperformance of Vox, the increasingly real possibility of a PP-Vox coalition may deter some moderate voters and lead to a political opening for the PSOE shortly before the election.

While we maintain our initial expectations that a PP-Vox coalition remains the most likely outcome of the elections, the vote in July may be much closer than initially anticipated. Additionally, such coalition arrangements may spark considerable policy unpredictability and revitalize Basque and Catalonian pro-independence movements.

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