Spain has rejected austerity. So what does it do now?

Spain is a long way from being Greece or Portugal, but in Sunday’s historic general election, Spaniards sent out the same message that the Greeks did in July and the Portugese did in October – namely, a resounding ‘No’ to austerity economics. Anti-austerity Podemos—the left-wing challenger party that is less than two years old—took a staggering 20.7 per cent of the national vote and is now the third-strongest political force in Spain.

As long as the composition of Spain’s new government is unknown, the country’s economic recovery is on hold – but two things, at least, are now very clear. First, the Popular Party has failed to convince many Spaniards of its claim to be the only economically competent party – that is, the only party that can nurture Spain’s return to economic health. This message was at the heart of its campaign narrative, with prime minister Mariano Rajoy citing his party’s adoption of austerity measures and labour market reforms as being key to the steady GDP growth of the last two years.