Spain ruling party hurt with upstart parties’ strong showing

For more than 30 years, the Popular Party (PP) and Socialists had alternated power, but they now find themselves challenged by Podemos and centrist party Ciudadanos, which came fourth in the closely-fought legislative polls.

An exit poll is projecting that Spain’s ruling Popular Party has won the most votes in the general election, but has fallen far short of a majority.

With 99.6 percent of votes counted, Rajoy’s Popular Party had 123 seats in the 350-seat national parliament, way beneath the 186-seat majority they secured in 2011.

The elections signal the end of two-party domination by the Popular Party and the Socialists.

The share of votes won by the two major parties would also be at its lowest in decades, signalling the end of the two-party system.

While Rajoy’s government has already passed the 2016 budget and a combination of low interest rates and cheap oil should help underpin economic growth, soothing any market concerns over political instability, prolonged deadlock in Madrid could be used by pro-independence Catalan parties to press their cause.

Mr Rajoy’s job reforms proved unpopular, but are expected to rebuild the Spanish economy.

“Whoever wins the elections must try to form a government”, said the Spanish prime minister, “I am going to try to form a government and I believe that Spain needs a stable government”. “We are people who actually govern this country before, because we are here to change things”, he said.

“If the current poll predictions are confirmed, then it looks like a Socialist government”, said Federico Santi, a London-based analyst with the Eurasia Group political risk consulting group.

ReutersPodemos (We Can) party supporters react as party leader Pablo Iglesias and other members address the crowd after results were announced in Spain’s general election in Madrid, Spain, December 21, 2015.

Polling stations close in Spain with anti-austerity Podemos party predicted to come second ahead of the Socialists.

The Spanish parliamentary elections seem poised to shape a fragmented and uncertain future for the country’s government after Sunday voting gave the center-right Popular Party the biggest bloc of influence with just under a third of the votes.

Ciudadanos was the most likely alliance partner for the Popular Party, but the number of combined seats they have isn’t enough for a majority.

“It’s clear that parties will have to negotiate and forming a government could be pretty complicated”, he added.

Voter turnout was 71 percent, two percentage points higher than in the previous election.

“GRAND COALITION” BETWEEN THE PP AND THE SOCIALISTS It would total 213 seats but both Rajoy and Socialist leader Pedro Sanchez have ruled it out on several occasions.

In recent months, there has been a surge of support for the Citizens Party.