Acting prime minister Mariano Rajoy came up six votes short in his attempt to build a coalition government, as expected in this corner.

Rajoy and his People’s Party (PP) worked out an agreement with Ciudadanos (Citizens), but the socialists (PSOE), the radical left Unidos Podemos (United We Can), and small separatist parties refused to go along. The margin was 180 to 170 against, with Rajoy needing 176 votes.

The result is Still No Government in Spain.

Spain’s political crisis deepened yet further on Wednesday when caretaker prime minister Mariano Rajoy failed to win the confidence of parliament in order to form a new government.

The result means that the stalemate which has left the country without a fully-fledged government stretches into a ninth month after general elections in December and June both failed to produce a conclusive result.

The country now faces the real possibility of a third general election in a year, unless Mr Rajoy or another candidate is able to conjure a parliamentary majority by the end of October. If the deadlock is not broken, the next election would fall on the highly inconvenient date of December 25.

The lack of a new government will also mean that a budget for 2017 cannot be passed, displeasing the European Commission, which has demanded fresh cuts to Spain’s public deficit.

PSOE leader Pedro Sánchez said he could not allow a government marked by “corruption, bad economic management and cutbacks” to remain in power. But Mr Sánchez has not outlined any plans for an alternative government after he failed to win a confidence vote in March when Podemos refused to join an agreement between PSOE and Ciudadanos.

What’s Next?

Felipe

I expect king Felipe VI to apply pressure to PSOE and Podemos. In that regard, neither is likely to join a grand coalition. However, Sánchez may agree to abstain.

Abstention would allow a minority government to form, but such a government  would not be very stable.

Should Felipe’s pressure fail, new elections become a near certainty.

In theory, PSOE, Podemos, and Ciudadanos could form a coalition, but Podemos is open to a Catalonia separatist referendum and Ciudadanos would never approve that platform.

Expect Resolution Soon

We will likely have a resolution within a week. By resolution, I mean we will know the final result: Minority government by abstention or new elections.

There is one additional possibility: Rajoy steps down. The price of a grand coalition with PSOE could conceivably be Rajoy stepping aside.

If new elections are in the cards, I suspect political forces will find a way to not have them on Christmas.

Mike “Mish” Shedlock