Spanish Premier Changes Tack With Pledge to Present His Budget

(Bloomberg) -- Pedro Sanchez, Spain's embattled prime minister, said his minority government would present a budget in January, challenging his political opponents to back a spending plan that he claims will help unwind years of austerity.

The cabinet will endorse the budget in January and then pass it to parliament for approval the same month, Sanchez said in an interview with broadcaster Telecinco on Tuesday. He refused to be drawn out on whether the government would hold early elections if he can't steer the plan through parliament.

“It's a social budget that's going to fight against inequality, that is going to rebuild the welfare state, and if the legislative power blocks or rejects it, it will have to explain itself to the citizens who need these policies,” Sanchez said.

Sanchez is changing strategic tack as he adjusts to changing political conditions evidenced by Sunday's elections in Andalusia in which a plunge in Socialist support has jeopardized the party's control of a political bastion it's governed for the last 36 years. As the head of a government with only 84 deputies in the 350-seat Spanish parliament, Sanchez is struggling to get legislation passed and signaled as recently as last month that he'd weigh calling snap elections next year if he couldn't get the budget through parliament.

Tall Task

In Sanchez's favor is an economic recovery that's now been underway for 20 quarters, driving down unemployment. Even so, the expansion is starting to lose steam and new fractures are emerging on the Spanish political scene, as evidenced by the results of the Andalusian election.

That vote saw the emergence of Vox, which won 12 seats in the 109-seat Andalusian parliament. The result leaves the far-right party holding the balance of power in the region and plenty of unanswered questions for Sanchez as he mulls his next political move.

Sanchez blamed the rise of Vox on the failure of the leadership of the conservative People's Party, which he said had failed to challenge Vox's appeal to its voters. He called for “moderate, tranquil” Spain to stand firm against the emerging far-right force and defend its values.

Passing a budget looks to be a tall task for Sanchez. After sealing a pact with the anti-austerity party Podemos, he still needs the support of nationalist parties in Catalonia and the Basque country to get it through parliament. The decision of several ex-members of the former regional government of the Catalan separatist leader Carles Puigdemont to stage a hunger strike has further raised tensions despite Sanchez's calls for moderation.

If he can't get the budget passed, Sanchez said he would rely on decrees to enforce some of its content. “We're going to get to work so that there is a budget,” he said.

To contact the reporter on this story: Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net, Ben Sills, Robert Jameson

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