Spain’s conservative Popular Party top polls, well short of majority

But Charo Fernández, a supporter of Mr Rajoy and the ruling PP, said she was backing the prime minister to ensure that Spain’s economic recovery remained on track: “It is obvious that it is the only party that can move the country forward, as they have been doing since the disaster [of the crisis]”.

A strong showing by a pair of upstart parties in Spain’s general election yesterday is threatening to overturn the country’s traditional two-party system.

“Austerity has also been defeated politically in Spain”, he said in a brief written statement.

With nearly all the votes counted, conservative Partido Popular had 123 seats, socialist PSOE 90, Podemos 69 and centrist Ciudadanos 40.

An alliance between the Socialists, Podemos and the former communists of Izquierda Unida would get 169 seats at best, although they could potentially attract a further 15 seats from smaller leftist regional groups.

Next come left-wing, anti-austerity Podemos party (at almost 20%) that was established only several years ago, and liberal Ciudadanos at 13.8%.

But Socialist leader Pedro Sanchez said the result clearly shows “Spain wants a move to the left”, adding that he and his party are ready for talks that could lead to a governing accord.

The PP’s 122 seats will leave it 54 short of the 176 needed for an absolute majority and it would have to win the support of other parties, especially Ciudadanos.

Podemos and Ciudadanos both gained strength by portraying the Popular Party and the Socialists as out-of-touch behemoths run by politicians who care more about maintaining their own power than citizens’ needs.

In Spain, the fragmented vote heralded a new era of pact-making, shattering a two-party system that has dominated Spain since the 1970s and casting a pall over an economic reform programme that has helped pull the country out of recession.

Pablo Iglesias, the ponytailed leader of Podemos, declared a major change in Spain’s political landscape.

If no candidate secures a majority within two months of the first vote, new elections have to be held. “The key question is whether there will be a coalition of parties against Rajoy”.

Hundreds of mostly young supporters for Podemos gathered in central Madrid in a party atmosphere, holding purple balloons, the colour of the barely two-year-old party. Other parties favor negotiations to devolve more power to Catalonia.

The fact that none of the four main parties have expressed any clear willingness to reach coalition deals will spark concern overseas that Spain is entering a period of political instability, just as the country’s economy had started to fire again.