SPANISH PM RAJOY OUSTED; SOCIALIST SANCHEZ TAKES OVER
Socialist leader Pedro Sanchez took over as Spain's prime minister on Friday, after parliament toppled his predecessor Mariano Rajoy in a no-confidence vote triggered by a corruption scandal involving members of his center-right party.
Lawmakers stood and cheered as Sanchez - who had earlier promised to try to steer the country through to mid-2020 when the parliamentary term ends - became the country's seventh head of government since its return to democracy in the late 1970s.
But Rajoy's departure after six years in office casts one of the euro zone's top four economies into an uncertain political landscape, just as another - Italy - pulled back from early elections.
Sanchez won Friday's noconfidence motion by 180 votes to 169, with one abstention.
The 46-year-old's Socialist party holds just 84 seats in the 350-member assembly, making it unclear how long his administration can last.
But his strong pro-european credentials, and the fact that Rajoy also ran a minority government, suggest fallout from any political ructions in one of the euro zone's fastgrowing economies is likely to be limited.
Spain's stock market rose after the parliamentary vote, to trade nearly 2 percent higher on Thursday's close, while the country's borrowing costs fell.
“Sanchez has reiterated a commitment with European orthodoxy and budget control in Spain,” UBS analysts said. “We do not anticipate a substantial impact on the pace of growth.”
Michael Metcalfe, head of global macro strategy, State Street Global Markets, added: “We've had a rude awaken- ing of European political risks this week... but the situation in Spain is very different from Italy.”
Anti-establishment parties in Rome revived coalition plans on Thursday, ending three months of turmoil by announcing a government that, by contrast, says it will increase spending and challenge European Union fiscal rules. PRO-EUROPE With most other Spanish parties also pro-european in outlook, Sanchez has already committed to respecting a fiscally conservative budget passed by Rajoy.
The fragmented parliament means he will also find it hard to row back on structural reforms passed by his predecessor, including new labor laws and cuts in healthcare and education.
In Berlin, a government spokesman said Germany hoped for a stable government in Madrid.
Leftist party Podemos has promised to support Sanchez in parliament, though it seems unlikely to gain major influence over Sanchez, who is keen to win back centrist voters.
After the vote result was announced, members of Podemos smiled and hugged each other before bursting into a chant of “Yes, we can” - the slogan of their party, a product of the widespread anger at spending cuts imposed by Rajoy's first government at the height of the euro zone crisis.
GRACIOUS, BUT UNDERMINED
The outgoing premier conceded defeat prior to the noconfidence vote, congratulating Sanchez and telling deputies in a short, gracious speech: “It has been an honor to have left Spain in a better state than I found it.” The 63-year-old stalwart of the center-right People's Party (PP) took over the government in 2011 in the middle of a deep recession and presided over a dramatic economic recovery.