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An insider’s view on the City of London and beyond

Predicting the Spanish December elections

¡Viva la diferencia!

Spain is different.

In the midst of disillusionment with the usual parties and politicians in Europe and the US, with citizens in France heading off to the far right, voting for Marine Le Pen and her National Front; with those of Poland voting for the Law & Justice Party, which sees Hungary’s anti-democratic government as a role model; with those of Greece…well, dear reader, you get the picture.

What is Spain going to do, with general elections on December 20? After all, Spaniards have more reason to complain than many other nations: tough austerity measures and unemployment over 20%, even with the economic recovery.

But Spain does not move in sync with any country, let alone France, Greece and Poland. The governing Partido Popular despite all the corruption and the charisma black hole of its leader, the country’s Prime Minister, Mariano Rajoy, scores highest in the opinion polls with 27%.

Why? Spaniards are more pragmatic than many of their European neighbours. They’re focusing on the economic revival, which has come about due to hard-hitting austerity measures and labour reforms, helped by a low oil price, the euro’s depreciation and private sector restructuring.

The traditional opposition party, the PSOE or Socialists, whose policies are social democratic, is clinging to second place in the polls with 21%. It suffers from its own corruption scandals and a leader, Pedro Sánchez, whose party is not fully behind him.

Meanwhile, a new party, Ciudadanos (Citizens) is snapping at its heels, scoring 19% in the polls. It stands to be the kingmaker and will likely ally with one of the two traditional parties to govern from 2016.

Yet again, Spain is different. It is the only European country post the crisis to boost a new party whose politics lie squarely in the centre. Cuidadanos is fiscally conservative, while its social policies are liberal; it is pro-business and calls for corporation tax to be lowered. Rumour has it that large Spanish companies have helped fund its coffers. Be that as it may, its high poll results speak for themselves. The leader, Albert Rivera, is a fresh-faced 36-year old Catalan, a useful weapon at a time when Cataluña’s independence and its lack of governability are key issues.

Over the last three years 3,000 companies have moved their headquarters from Cataluña, mainly to Madrid. The pace and size of the companies relocating accelerated this year.

In truth, the fault for the current state of the Catalan question lies just as much on the shoulders of an intransigent, unimaginative Prime Minister. The best result for Spain’s unity and its economic health, which happens to be the most likely result, is either a Socialist/Ciudadanos coalition, or a Popular Party/Ciudadanos coalition, with PM Mariano Rajoy forced out of the picture.

In point of fact there is another protest party, Podemos, but its support in the polls has plummeted to 14% from 28% a year ago. It is led by a pony-tailed academic who has been moving briskly away from the extreme left towards the centre, where the majority of Spaniards feel most comfortable.

On the economic front, growth this year looks like being 3.2% and next year is estimated at 2.7%. The highest sustainable growth rate in Europe. Spain’s stock market may provide a buying opportunity for 2016, with the IBEX index forecast to rise over 12%, according to BNP Paribas.

Moderation, aspiration and consumption are not words that set the world on fire. But for Spain, they are likely to ring true on December 20.

¡Viva la diferencia!