11th November 2019

Written by Juan Palenzuela, Researcher

Edited by David Gaffney, Partner

Good morning,

Españolito, a 1912 poem by Spanish poet Antonio Machado, speaks to a newborn who is soon to be welcomed to the world by one of the two Spains. One of them is conservative, deeply religious and reactionary; while the other is progressive, anticlerical and republican. Both of them Spain, after all.

The country has lived with a deep political divide for over two centuries, something that Machado named las dos Españas. Even after the transition to democracy in 1975, the divide remained persistent, albeit at a diminished rate.

Nonetheless, the preliminary results of the general elections that took place in Spain yesterday show a worrying sign of polarisation.

The Socialist PSOE, currently heading the government, secured 120 congress seats, while the conservative Partido Popular (PP) took 87. Podemos and Ciudadanos won 35 and 10 seats respectively. The most notable outcome of the election, however, is the 52 seats secured by the far-right populist Vox, more than doubling its 24 seats from the previous election in April. Judging by the number of votes, Vox had by far the best relative performance, as its share grew 28% in a matter of months, as the party went from a fringe movement to a national political force. Although polls before the election showed rising support, the scale of the party’s influence is still a surprise.

The rise in support for the party can be attributed to three main factors, First, Vox appears to have been more successful than other parties in mobilising and retaining its voters. According to a survey by 40dB (£), Vox was expected to maintain 85% of the votes it obtained in April, the highest retention rate of any party, by far.

Second, the same survey shows that Vox has been extremely successful in attracting voters from other parties, particularly from the PP and Ciudadanos, and persuading those who abstained in the April election. Third, and most importantly, the re-emergence of the Catalonian issue over the past months has buoyed support for a far-right, nationalist political platform; something that was relatively alien to Spanish politics until recently. According to the same survey by 40dB, 97% of Vox supporters, 15% of Ciudadanos voters, 30% of PP voters, and eight per cent of PSOE voters believe that Vox is best placed to manage the Catalan conflict.

The 46 remaining seats are spread between smaller regional parties. With 175 seats needed to form a government, the governing PSOE party will be forced to offer serious concessions to a number of players. If that fails, Spain will have to head to the polls for the fifth time in four years, which doesn’t exactly breed confidence that two centuries of division is about to be healed, especially with a newly emboldened Vox party on the march.

News

The president of Bolivia, Evo Morales, announced his resignation last night after the army’s high command suggested that he stepped down to bring peace and stability to the country. Bolivia has been engulfed in protests after a dubious election last month. The country’s constitution allows for two presidential terms. Arguing that his first doesn’t count, Morales vowed to run for a fourth term, calling a referendum on the matter – which he lost – only to have the loyalist supreme court annul term limits anyway. A report from the Organization of American States revealed serious irregularities in the election.

Two Australian states, New South Wales and Queensland, have declared a state of emergency as bushfires continue to spread, presenting a big threat to the heavily populated areas of the nation's east. At least three people have died and thousands have been displaced in the last three days as a result of the bushfires.

Medicines derived from cannabis have been approved for use on the NHS for the first time. The National Institute for Health and Care Excellence (Nice), the body responsible for producing guidelines on the use of new medicines, approved the use of two cannabis drugs, Epidyolex and Savitex, for epilepsy in children and for multiple sclerosis respectively.

Business and economy

The outgoing European Central Bank board member Benoit Coeure has been appointed to head the newly created Innovation Hub of the Bank for International Settlements (BIS). The Innovation Hub is charged with producing public alternatives to private digital currencies such as Facebook’s Libra. BIS, which is owned by 60 central banks from around the world, created the initiative earlier this year to compete with private sector monetary and payment innovations.

A rescue deal between British Steel and China's Jingye Group is set to be announced which could save up to 4,000 jobs in the UK. The Chinese group has already agreed in principle to buy British Steel for £70m, and the government is set to help with loan guarantees and other financial support to facilitate the deal. British Steel has been kept running by the government since May, when the company went into liquidation. As well as employing 4,000 people at its Scunthorpe and Teesside sites, British Steel supports an additional 20,000 jobs throughout the whole supply chain.

Easyjet is planning to fill the void created by the collapse of Thomas Cook and reveal its own package holiday business next week, according to The Times. Its move into packaged holidays is the fruition of a plan set in motion soon after Johan Lundgren became the airline’s chief executive nearly two years ago. The decision goes against the opinion of many players in the industry, including Ryanair’s CEO Michael O’Leary, who say the age of the package holiday is over. (£)

Markets

The week ahead

In the wake of last week's flurry of market highs and trade talks, the week ahead appears relatively tempered at first glance.

Disney will finally launch its own streaming service, Disney+, on Tuesday. It is the newest entrant into the growing list of streaming services. Disney’s roster of big brands will give the company a strong competitive advantage, backed by the company’s strong willingness to acquire other businesses: the company has acquired Star Wars, Marvel, and The Muppets in the past. Besides the new direct competition, Netflix will be affected as Disney pulls out its content from the platform.

Meanwhile, Alibaba is expected to ask for listing approval from the Hong Kong Stock Exchange on Thursday. According to CNBC, if approved, the listing will go forward in the last week in November. Alibaba is looking to raise between $10 billion and $15 billion in its IPO.

Today is also Singles Day in China, one of the biggest shopping events of the year and still growing every year. Alibaba reported $13 billion in sales alone for just the first hour on Singles Day.

What's happening today?

Finals

Beximco Pharma Carrs Group Wey Education

Interims

Kainos Group Tatton Asset M.

AGMs

Salt Lake Pot

UK economic announcements

(08:30) GDP (Preliminary) (09:30) Index of Services (09:30) Manufacturing Production (09:30) GDP (Preliminary) (09:30) Industrial Production

Columns of note

Writing for the Financial Times, Ben Hall argues that the latest Spanish election results mean it will be even harder for governing PSOE to form a government. Above all, he sees a missed opportunity for the centrist Ciudadanos party, which could have backed a reformist, social democratic coalition government following April’s vote. The decision not to do that ultimately lead to Sunday's poll, in which Ciudadanos was severely punished by voters: it lost 47 of its previous 57 seats. Mr Rivera’s survival as party leader is now in serious doubt, argues Hall.

In The Times, Clare Foges says that voter flexibility is increasing drastically, and that is a good thing for democracy. Polls in recent weeks have shown that voters are party swapping like never before. Divisions over Brexit and leadership are eroding the idea that your background, income, profession or age should dictate that you adhere to a political party for life. When parties feel there is a section of the electorate who will always put an X in their box, policy innovation is put on the back burner, argues Foge. But once parties are less bound by what their core voters might feel, they will be able to think with the “safety catch” off, she says, thus prioritising what works rather than whether it will play well with their base. (£)

Did you know?

In 1980, the US Supreme Court ruled that the country unjustly took 73 million acres of tribal land from the Sioux, including the sacred Black Hills. The Supreme Court ordered the Federal Government to recompense the tribe with over $1 billion, but the Sioux have never accepted the money, demanding instead the return of the land.

Parliamentary highlights

TODAY House of Commons No business scheduled

House of Lords No business scheduled

Scottish Parliament No business scheduled

TOMORROW

House of Commons No business scheduled

House of Lords No business scheduled

Scottish Parliament Topical questions (if selected)

Scottish Government Debate Protecting the Rights of EU Citizens in Scotland

Member’s Business Tackling Intimidation in Public Life