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Rabobank analysts explain that for the Spanish economy, the centre-left PSOE has won Sunday’s elections as radical-right enters parliament.

Key Quotes

“The radical right will not have a direct say in the next government, but likely to indirectly influence stance of all right-wing opposition parties.”

“A minority government is in the cards, but not a given and negotiations will take time.”

“The initial reaction in financial markets to the election results has been calm.”

“The economy should not suffer much in the short run, but medium-term challenges are unlikely to be forcefully dealt with and fiscal consolidation is likely to proceed too slow.”