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  • TPA Research

Looking Ahead (29 April)

w/c Monday, 29 April – Process of coalition building to get underway following strong performance by PSOE

Yesterday’s general election in Spain saw Pedro Sanchez’s PSOE comfortably secure the most seats with 28.7% of the votes. While a PSOE-Ciudadanos tie-up would deliver 180 seats, a four-seat majority, Sanchez will firstly look to regionalist forces to secure a government.

Sanchez is likely to accept a mandate for government formation from King Felipe VI, but may delay his investiture vote in the Spanish parliament. Under the Spanish Constitution, a candidate requires an absolute majority if they are to succeed in the first parliamentary vote. If the candidate is unsuccessful, a second vote is held two days later. In a second vote only a simple majority is required. This can allow the election of a candidate through abstentions of some parliamentary blocs. If a second vote fails, a general election is held.

Sanchez could cobble together a coalition of 175 seats, one seat short of a majority, by relying on the 42 seats of Podemos and regional parties that do not favour independence. This would not be sufficient to have Sanchez’s premiership approved by Parliament first time round although he could be elected in the second round of voting if he manages to persuade one additional MP to abstain. He may look to secure the support of pro-independence Catalan forces in an investiture vote by holding a statutory consultation for a greater degree of autonomy for Catalunya or by pardoning the leaders of the Catalan separatist movement that are currently on trial in the Supreme Court. Either way, pro-independence forces, which saw their vote share increase since 2016, will continue to play a significant role in the governance of Spain for the forthcoming parliamentary term.

Monday, 30 April – Preliminary flash estimate EU and Eurozone GDP Q1 2019

Eurostat’s preliminary flash estimate for EU and Eurozone economic growth in the first quarter of the year will be examined for any indication that consistently weak manufacturing PMI data, particularly from Germany, has exacerbated any slowdown in the wider EU and Eurozone economies. Indications of a slowing of the Eurozone economy will bolster expectations that the ECB will not be able to begin tightening policy for some time yet.

While GDP figures form part of the big picture for assessments of ECB policy, price growth remains the metric by which the bank makes its decisions. Flash inflation figures for April will be published on 3 May. Analysts will assess whether these figures provide any indication that core inflation has broken free from a narrow band around 1% where it has been hovering for many months.

Thursday, 2 May – UK local elections

Local elections will be held on 2 May for 248 English local councils and directly elected mayors for six English cities. All councils in Northern Ireland will hold elections on the same date. Across the councils being contested, the Conservative Party holds 163 councils with 5521 seats, Labour holds 74 councils with 2278 seats, the Liberal Democrats hold 4 councils with 658 seats, and UKIP holds no councils with 176 seats.

For Theresa May there will be some relief that Nigel Farage’s Brexit Party is not contesting the elections and that UKIP – who might otherwise have picked up the Leave vote – are fielding a limited number of candidates. There is still though the possibility of high profile Tory losses to Labour and to the Liberal Democrats.

If the election does produce Conservative losses and gains for the opposition – particularly Labour – it will intensify the pressure on Theresa May to resign. It will also sharpen the Conservative Party focus on the European Elections, where they currently look set to receive a beating at the hands of Nigel Farage’s Brexit Party.

It would now make little sense for Jeremy Corbyn to advocate a deal at the point when the Conservatives face humiliation. The Labour Party National Executive Committee, which has a majority of Jeremy Corbyn supporters, is due to vote tomorrow on whether to formally back calls for a second referendum in their European Election manifesto. We expect that Corbyn supporters on the NEC will instead vote to maintain the Labour policy of ambiguity, keeping the option of a referendum on the table but not firmly committing to it.

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