MADRID (Reuters) - Prime Minister-elect Mariano Rajoy resisted pressure on Monday to disclose his plans for rescuing Spain from economic disaster, keeping anxious Spaniards and impatient investors on edge following his election triumph.
The landslide victory of his conservative People’s Party’s (PP) at the polls on Sunday failed to lift investors, who were desperate for some detail on his strategy to prevent Spain going the way of other euro zone members in taking an international bail-out.
Angry voters punished the outgoing Socialists for a crisis that has pushed unemployment in Spain to more than 20 percent, the highest in the European Union.
PP Secretary-General Dolores Cospedal said Rajoy, long known for his caution, would not name a cabinet or detail his strategy before he was sworn in just before Christmas — a delay imposed by the Spanish constitution.
Briefing reporters after a meeting of the party leadership, she said Rajoy had told them he believed he had a mandate to bring in austerity measures.
The sovereign debt problem needed a coordinated European effort but Spain would meet its obligations, she added.
“The first thing to tell Spaniards is the truth. Society is mature enough to be aware of absolutely everything that’s happening,” Cospedal quoted Rajoy as saying.
“Rajoy has expressed his wish for the swearing-in debate and the naming of the new government to take place as soon as possible in line with the law and we shall work for the new government to be in place before Christmas Day,” she said.
A party source, asked if Rajoy was concerned that inaction would be taken badly by investors, told Reuters: “He’s worried but doesn’t feel pressured.”
Rajoy had built his election campaign on restoring economic confidence and the lack of detailed information on his policies on Monday was likely to dent markets which have so far taken little cheer from the widely predicted conservative victory.
Yields on Spanish government bonds and safe haven German bunds widened by more than 20 basis points on Monday to around 470. Ten-year yields were higher, hitting 6.58 percent and creeping closer to the perilous 7 percent level that forced Greece, Portugal and Ireland to seek bailouts.
“The need for immediate action from the new government is pressing, with Spain’s bond yields at punishingly high levels,” IHS Global Insight economist Raj Badiani said in a research note.
Spain’s second recession in two years is looming and could be worsened by austerity measures planned by Rajoy, analysts say.
Funcas research foundation cut its growth outlook for next year to a negative 0.5 percent from a positive 1.0 percent, citing the effect of government spending cuts to meet deficit targets.
Ordinary Spaniards also worried about just how hard they would be hit by economic reforms.
“I think there will be people in the street when they see what they are going to do,” said Jose Antonio Garcia, a 28-year-old left-wing voter.
Rajoy, a 56-year-old former Interior Minister, has indicated he plans labor market and a financial reforms as well as sweeping changes in the public sector, but in the election campaign gave no clear policy lines, relying instead on the Socialists’ failings to propel him into power.
“The fact that investors have to wait another month for Mr Rajoy’s cabinet to take the reins only adds to the uncertainty,” said Nicholas Spiro of Spiro Sovereign Strategy.
The Spanish Treasury heads back to the markets with debt auctions on Tuesday and Thursday this week, the first key tests of confidence in Rajoy’s leadership.
Spaniards are resigned to a battery of reforms to resuscitate the economy that could make things worse before they get better and at least initially increase unemployment, with 5 million people already out of work.
The PP won the biggest majority for any party in three decades, taking 186 seats in the 350-seat lower house.
But small leftist parties also enjoyed a premium from the Socialist rout, with many voters turning to them rather than the conservatives, who they fear will slash Spain’s treasured national health and education systems.
Earlier this year tens of thousands of people dubbed “Indignados” (Indignants) occupied town squares across the country in demonstrations against their social and economic plight.
The rallies dropped off before the election but anger may well boil over again when Rajoy’s measures become clear.
“The result is outstanding for the right... but it also reflects huge discontent. I think they will do what they like in parliament but people will be out on the street,” said Madrid taxi driver Tomas Ruiz, 29.
The Socialists slumped to 111 seats from 169 in the outgoing parliament, their worst showing in 30 years. Voters blamed them for reacting too late to a collapsed housing boom which has left the nation sliding toward recession.
Spain is the fifth euro zone government to be toppled this year by a debt crisis that now seems out of the control of vulnerable individual countries. It followed Greece, Ireland, Portugal and Italy.
Economic gloom dominated the election campaign, with more than 40 percent of young Spaniards unable to find work and a million people at risk of losing their homes to the banks.
When the Socialists took power in 2004 Spain was riding a construction boom fueled by cheap interest rates, infrastructure projects and foreign demand for vacation homes on the country’s sunny coastlines.
But the government, consumers and companies were engulfed in debt when the building sector collapsed in 2007, leaving the landscape dotted with vacant housing developments, empty airports and underused highways.
Many Spaniards saw no reason for joy over the election result.
Oscar Ortega, a 38-year-old building concierge, said: “I want to believe that they are going to help us but it seems to me to be a shame to celebrate a victory in the situation we are in. I don’t know what those people in the street last night were celebrating. Let’s do that when we have a solution.”
Additional reporting by Elisabeth O'Leary, Paul Day, Tomas Cobos, Emma Pinedo, Judy MacInnes; Writing by Angus MacSwan, Editing by Barry Moody