The Spanish Socialist Party currently in power, headed by Prime Minister Zapatero was overwhelmingly defeated in local elections on Sunday, with the opposition conservative Popular Party (PP) winning 37.6% of the votes versus the 27.8% by the Socialist Party (PSOE). What was significant was the loss of strongholds like Barcelona and Seville.
Some analysts have voiced concern new regional leaders in Spain might uncover budget shortfalls.
The results were not surprising, as many voters were angered by the debt crisis and one of the highest unemployment rates in Spain. Young protestors were camping out all weekend in Madrid’s main Puerta Del Sol Square to protest austerity measures.
Speaking after the announcement of official results from the Interior Ministry, the Spanish prime minister acknowledged the defeat of his party, but categorically ruled out the possibility of early elections. The general elections are scheduled for March 2012.
He attributed his overwhelming defeat of the Socialists on the financial crisis and acknowledges that thousands of jobs were lost. In his speech he expressed his understanding that many Spaniards are suffering.
However, he vows to reduce unemployment by the end of the year. Zapatero has promised no more austerity measures, a fresh round of which could provoke renewed protests.
At the same time he promised investors that he will maintain his commitment to cut the budget deficit to 6 percent of Gross Domestic Product by 2012.
Investors will focus on whether he will achieve his goals, and remain doubtful, becoming more concerned Spain will follow in Greece’s footsteps.
The Euro has been plummeting against the US Dollar, breaking past the critical psychological support level of 1.400 in European trading this morning, touching as low as 1.3968, down from the open level of 1.4067.