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Steven Trypsteen, Economist at ING, suggests that in addition to the political problems in Catalonia, the Spain’s minority government has now to face the immediate threat of a motion of no confidence.

Key Quotes

“After the PP party was sentenced in a corruption case, the PSOE, the socialist party, filed a motion of no confidence against the PP-led minority government of Mariano Rajoy. The motion needs an absolute majority, 176 of the 350 MPs, and it is not certain that this majority will be met.”

“Podemos said it will support the motion. But as the PSOE has 85 seats and Podemos 71, they are still 20 seats short to get the needed majority. Other parties will have to give their support too.”

“Article 155 is still in force in Catalonia. As long as there is no regional government in Catalonia, this will be the case. Sanches, the leader of Ciudadanos, said a strong government is needed to tackle the challenges in Catalonia.”

“Meanwhile, the spread between Spanish and German government bond yields increased slightly. The spread could widen further if tensions intensify.”