Pedro Sanchez, the incumbent Socialist prime minister, is putting on a brave face and proclaiming victory. “We’ve won the election and we’re going to work for a progressive government,” he told party supporters in Madrid as results arrived on Sunday night. But his position has been corroded in a country that looks even more polarised and politically-paralysed than before. So what are the wider lessons of this latest election debacle?

1. Election gambles are high-risk in volatile political climates

Theresa May might have warned Sanchez to be wary of rolling the dice to break political deadlock after her election debacle in 2017. However, like Boris Johnson in this country, Sanchez felt he had little choice but to chance his luck at the polls. He remains the most likely candidate for prime minister. But he has failed to resolve the crisis of government in the eurozone’s fourth-largest economy after a ballot that left several losers but one big winner —  Vox, the far-right force that has more than doubled its seats in parliament to become the nation’s third-biggest party.

If you play with fire, you are liable to get burned — especially when raising the ghost of Franco by exhuming his remains and the spectre of separatism stalks a land still badly scarred by the financial crash a decade ago.

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2. Traditional two-party politics is breaking down

The Socialists topped the poll for the second time this year — but fell short of winning a workable majority. Sanchez’s party slid back three seats, leaving it 56 short of a majority in parliament, while the conservative Popular Party closed the gap after gaining 22 seats on their historic low in April. Nonetheless it still has less than half the number needed to rule on its own.

These dismal results show how traditional parties of Left and Right, which dominated Spanish politics for four decades after the restoration of democracy in the mid-seventies, are floundering as new parties rise around them. The two parties which used to routinely scoop up eight in 10 votes at elections collected less than half the total vote on Sunday. Three parties were fighting for votes on the Right and three more on the Left.

Spain is far from unique. Political duopolies are being ripped apart across Europe as traditional parties struggle to retain power. We saw this in Britain two years ago when May threw away the Tory majority, leaving her forced to bribe the Democratic Unionist Party to stay in Downing Street, and then a few months later in Germany, when the main parties suffered their worst results for almost seven decades. These historic coalitions are struggling as nationalism rises on the right, identity politics consumes much of the Left and technology exerts its disruptive power. Austerity and environmental issues are also reshaping political landscapes. In Germany, political fragmentation means 13 different coalitions govern its 16 federal states.

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3. Polarised political systems can be left paralysed

Spain’s election has simply fuelled uncertainty. Parties on the Left won 158 seats, while the Right took a combined 150 seats, leaving both significantly short of a majority. Sanchez looks the most likely prime minister but creating a functioning coalition appears harder than before. “Forming a government looked complicated in April – now it is an inscrutable hieroglyph,” was the El Pais verdict.

It may take months to sort a coalition deal, yet this is becoming commonplace in European democracies. Belgium famously went 541 days without a government after an election in June 2010. More recently, Holland and Sweden have endured months of stasis after inconclusive elections. Two elections in Israel this year failed to deliver stability. Meanwhile Britain’s election is intended to break a Brexit logjam that has stymied parliament, reflecting the divisions in the country inflamed by the 2016 referendum — although some fear it could prove as inconclusive the Spanish contest.

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4. Populism remains a powerful force

There were some hopeful suggestions recently Europe had reached peak populism after liberal lawyer Zuzana Caputova became Slovakia’s first female president, the Austrian far-right crashed after being snared in a corruption scandal, and the ultra-nationalist League in Italy, led by selfie-loving Matteo Salvini, was thrown out of government. But in recent weeks we have seen the anti-immigrant Alternative fur Deutschland chalk up some of its best results in German state elections and now this astonishing surge by Vox in Spain.

Many analysts used to argue Spain was the “European exception” —  immune to such populism since nationalist dictatorship was such a recent and painful memory in the country. But Santiago Abascal has managed to establish Vox as a significant force in Spain after winning more than 15% of the vote, ensuring a party only six years old that entered parliament for the first time in April now breathes down the neck of the PP.

Vox exploited the tensions over Catalonia with calls for a tough response, appealing to young male voters, while polling showed a rise in support when Franco’s remains were finally exhumed last month. Vox is an ultra-conservative force, defending bull-fighting while attacking political correctness, but like other populist parties, it ramps up hostility to migration as seen in its calls for a wall around Spanish enclaves in north Africa. “We have managed to open up all the prohibited debates,” said Abascal.

And just like far-right counterparts across the continent, its rise is dragging other parties on the Right away from the centre as it presents existential challenges for traditional conservatives. “Vox’s rise creates a serious dilemma for PP: facilitate a Socialist-led government, which would leave the centre-right party vulnerable to Vox‘s attacks, or going to another election with Vox on the rise,” tweeted analyst Antonio Barroso.

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5. But populists suffer when confronted by political reality

There were two big losers in Sunday’s election. Ironically, they were the two parties that sparked the country’s political crisis with their rise in 2015, which reshaped Spanish politics by challenging the long hegemony of traditional parties. But now the hard-left Podemos, much admired by Jeremy Corbyn, has fewer than half of the 71 seats it held at the start of the year while its centre-right rival, Ciudadanos, has collapsed from 57 to 10 seats, forcing its leader to quit.

They show the difficulties of sustaining a democratic insurgency, especially when based on politics of resentment. The fall of Podemos is especially fascinating, demonstrating what happens when ideological purity confronts pragmatism of everyday politics. This party emerged five-years ago from huge anti-austerity protests in a nation badly wounded by the financial meltdown and bursting of a housing bubble, which still suffers very high youth unemployment. Pablo Iglesias, its charismatic pony-tailed leader, promised to transform politics and came close to stealing the crown of Spain’s left from Sanchez. Then came infighting, fragmentation and bitter rows over compromises in local government. Now it looks significantly diminished.

Pro-business Ciudadanos could not be more different ideologically, but it also hoped to exploit the country’s discredited old politics. Instead it has been humiliated after crumbling from third place to sixth. This group began as a regional party in Catalonia, founded by anti-independence activists, then sought to capitalise on huge corruption staining the PP. Ciudadanos rose rapidly, winning one in seven voters in 2015 but has now shrunk back to be smaller than the Catalan Republican Left in parliament after a disastrous few months. First it refused to negotiate with Sanchez over a governing agreement, then foolishly tried to compete with Vox by tacking hard Right, triggering a spate of resignations from senior officials. Its leader, Albert Rivera, who once posed naked in a campaign poster, has resigned.

New politics does not take long to look like old politics.

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6. Democracy is left looking dysfunctional

In June 2015 — after the first of this recent quartet of elections — exit polls predicted Podemos had broken the mould and beaten the Socialists. Then the results came in and crushed their hopes. After this latest verdict of Spanish voters, Iglesias insisted that “the only way to stop the far-right in Spain is to have a stable government”.

He is right. Yet this concept of strong and stable government (to coin a familiar phrase) looks further off then ever in Spain after a result that leaves democracy looking dysfunctional again as it struggles to adapt to a fast-changing world. Studies have shown dwindling support in Western nations for the world’s most successful form of government as populists in various hues exploit electoral and economic dissatisfaction. Spain is just one more nation on our polarised continent struggling to find a path through these tempestuous political storms.

1. Germany

Germany’s state elections will be a test of the strength of blue-collar populists on the one hand, and the centrist anti-populist reaction on the other. State elections held last year showed that the anti-immigrant Alternative for Germany (AfD) has support even in parts of Western Germany. AfD entered the regional parliaments in Bavaria and Hesse, taking votes from both the centre-Right CDU/CSU and the centre-left SPD. But other voters abandoned the mainstream parties for the opposite reason – they thought the grand coalition too restrictive of migration, with the Greens being the greatest beneficiary.

Bremen’s election this year, scheduled on May 26, the day of the EU elections, will test the SPD’s resilience – the party has received the most votes there in every state election since 1946. No polls have been taken since the recent Green spurt, but in August the SPD were level with the CSU and only 6% ahead of the Greens. If the national poll trends since then – which show the SPD falling and the Greens rising – are occurring in Bremen too, the SPD is currently running behind the CDU in Bremen and running neck and neck with the Greens.

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Such a result would be a disaster for the SPD and would likely pile the pressure on them to abandon their grand coalition with Chancellor Merkel’s CDU/CSU. Should that occur, it is unlikely that Merkel or CDU party president, and presumed heir apparent, Annegret Kramp-Krannenbauer, could form a government since the only alternative to a grand coalition is a CDU/CSU-Green-FDP coalition. A governmental collapse would then send Germans to the polls in a snap federal election.

The other state elections occur in three former East German states, and the key question there is whether the AfD will take first place in any – or even all – contests. The most recent polls in Brandenburg, Saxony, and Thuringia all show the AfD in second place, but only a few points behind the front runner. Moreover, each state’s poll shows the combined vote share for the AfD and the descendants of the former East German Communist party, Die Linke (“The Left”), at between 39% and 44%.

That would make for extremely fraught coalition talks, as the only possible outcome that excludes both parties involves four party administrations involving the CDU, SPD, the liberal FDP and the Greens. In Thuringia and Saxony, polls indicate that the only alternative to such a rainbow coalition would require the CDU to partner with the AfD or Die Linke, neither of which the party has ever been willing to do.

2. Spain

In conjunction with the EU vote on May 26^th, 13 of Spain’s regions will go to the polls. All three types of populists have parties contesting these elections, and two of them look to be rising. The Right-wing populist party, Vox, is poised to enter most regions’ parliaments. The centrist populist Ciudadanos are also poised for significant gains, giving them near equal status with Spain’s two traditional parties in many regions. But the Leftist populist Podemos, or Unidos Podemos in some regions where they have combined with the former United Left, are likely to slip in most states.

All three trends are apparent in the Madrid region. Vox’s staunch opposition to Catalonian separatism and migration has seen it skyrocket in the polls, where it currently receives 12-18%. Much of this support, seemingly, comes from the traditional party of the centre-Right, Partido Popular (PP). But support also seems to be coming from former Podemos voters too. Podemos and the United Left had received over 23% in 2015, but the new grouping Unidos Podemos was polling at only 18% in early January. Just as is the case with support for similar parties around the world, like the Sweden Democrats and Germany’s AfD, Vox’s support thus seems to come from both the Left and Right.

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Spain’s government is likely to become even less stable over the coming years. The current parliament is roughly split between a Left-populist bloc and a Right-centre bloc, with Vox currently unrepresented. The balance of power is held by a grab bag of regional parties and Catalonian separatists. If the government were to fall this year, unable to paper over the differences between these groups, Vox seem likely to gain enough seats to hold the balance of power.

This would present Spain with the same dilemma as other Europeans countries: either they create a grand coalition that weakens over time or they invite the populists into government in a centre-Right led coalition. Either course is likely to increase political instability in the EU’s fourth largest economy.

3. Estonia

Estonia’s election on March 1 is likely to see a new, Eurosceptic and ethno-nationalist party hold the balance of power. The Conservative People’s Party of Estonia (EKRE) has recently been polling around 20%, making it the third largest party in the country. With the market-liberal Reform Party and the centre-Left, Centre Party running roughly even, the EKRE could decide which party takes the Prime Minister’s chair.

EKRE emphasises Estonian nationality above all else – arguing that Estonia has become a “vassal state” of the EU. It strongly opposes immigration and Russian involvement in the Ukraine and Georgia, and challenges the market forces it says have made Estonia a home of cheap labour for foreign capital. Inclusion of the EKRE in government would undoubtedly sound alarm bells among the European establishment, but their participation may be unavoidable if there is to be stable government.

4. Denmark

The Danish election, which must be held on or before 17 June, seems likely to further demonstrate populism’s impact. The Danish People’s Party (DF) is one of Europe’s more successful blue-collar populist parties and has been a mainstay of the current centre-Right governing coalition. Even the Social Democrats have backed some of the government’s anti-immigration proposals (at the expense of their link with longtime partners the Social Liberals). While the Social Democrats look set to finish in first place, Denmark’s fragmented party system requires at least three parties to coalesce to form a government. The Social Democrats’ shift on migration issues opens up the possibility of a European first: a centre-left-led government that includes a blue-collar populist party.

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DF has been so successful that it has now spawned a competitor, the New Right (Nye Boergerlige in Danish). Formed by former members of the Conservative People’s Party, the New Right argues that DF is too supportive of migrants. It is also well to DF’s right on economic matters, with its leader supporting the total elimination of corporate taxation. Polls show it is consistently above the 2% threshold for parliamentary representation.

5. Canada

Canada’s general election, scheduled for October 19^th, will be another test of populism’s appeal. Despite having one of the largest shares of immigrants in the Western world, Canada – thanks in part to a skills-based immigration policy – has largely avoided anti-migrant populism. But that will be put to the test by former Conservative MP Maxime Bernier’s new People’s Party of Canada.

Bernier left the Conservatives after narrowly losing his bid to become their leader. His new party will campaign on pro-market economics and lower levels of overall immigration. It is currently polling below 2% in the polls, and, like the UK, Canada’s first-past-the-post electoral system prevents small parties from winning many, if any, seats. Its influence could nevertheless force the Conservatives to the Right in order to increase their chance of beating Justin Trudeau’s Liberal Party. Even raising the issue threatens to break Canada’s pro-immigration consensus.

Bernier’s home province of Quebec is particularly interesting. Quebec is the only province allowed to admit its own economic immigrants, and the province’s desire to maintain its predominantly Francophone status has meant it is increasingly admitting migrants from North Africa. Quebec is also where anti-Muslim feelings are strongest, and a centre-Right party pledging to reduce immigration by 20% won a majority of seats in last year’s provincial election.

Conservative Party leader Andrew Scheer recently said he wants to work with the Quebec government to give it more authority over non-economic migration in the province, a position widely believed to be crafted to court the Quebec centre-Right vote.

Much can happen in a year, but it’s hard to see the elites’ dream of a return to normalcy becoming a reality. Too many voters are dreaming of something quite different to the status quo, and the populist parties look most likely to deliver it for them.

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But this only provides so much distraction from a more troubling story: that of the economy. Improved overall growth figures cannot conceal the ongoing rise in precarious and poorly paid work which increasingly characterises the Spanish economy.

Rents in Spain have been rising 12 times faster than salaries; the typical salary of young workers entering the labour market is 33% lower today than it was in 2008; and about 90% of new employment contracts signed in 2015 were for temporary positions. Unemployment peaked at 27% in 2013 and has since fallen, but it remains twice that of the Eurozone average. And the country also holds the unenviable distinction of having the third highest rate of child poverty in the EU (after Romania and Greece).

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But these broad-brush statistics don’t tell the full story. Others have done pretty well out of Spain’s descent into recession a decade ago: the wealthiest 1% saw its share of national wealth increase from 17% in 2011 to 20% in 2014, according to the Bank of Spain. Indeed, it is the poorest 25% who have suffered the biggest loss of wealth since 2011, with the bottom quarter in debt by an average of €1,300.

It’s a disparity that can be seen starkly in the contrast between the undeveloped south, areas such as Andalusia and Murcia, and cities such as Madrid and Barcelona. The average salary in the Madrid suburb of Pozuelo de Alarcón is €73,000, while in Torrevieja, a province of Alicante, it is just €13,000. A summer holiday resort that attracts its fair share of British pensioners in search of sea, sun and sangria, Torrevieja experiences challenges similar to towns like Blackpool, with many of the local jobs vanishing during the winter months. The nearby city of Elda, another tourist destination, was listed as having the highest number of residents out of work in the whole of Spain in 2015, with an astonishing 40% of residents without a job.

The south east, you could call it flyover Spain, was particularly badly hit by the decline of construction. And white elephants – all those abandoned building projects – dot the landscape after toxic debt burst the building bubble and brought down the country’s banks.[1. The most notorious example is the empty Cuidad Real airport, which sits 235km south of Madrid. Built in 2008, the airport went bankrupt in 2012, and sits abandoned to nature and the elements. It is a ghostly testament to the irresponsible and over-priced projects which helped to cripple Spain’s construction sector.]

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Nor is it only rural areas that are still suffering. Despite being nominally Spain’s third city, Valencia is very much treated as flyover country by Spanish elites. New home stock in the city has fallen by 35% since 2009. With the disappearance of new building projects, large numbers of jobs – and with them incomes – have disappeared too. In 2014 it was estimated that a quarter of all Valencia’s inhabitants were living in poverty. And once you are on the way to the bottom it often takes very little to sink a few more rungs. A street count carried out in Valencia in 2016 by the homelessness charity Bokatas found that over 400 people were sleeping rough in the city – far more than the official estimate of 79 people made the previous year.

The rise of outsider parties in Spain was undoubtedly rooted in the inability of mainstream parties to deal effectively with this fallout, generated by the financial crash, and the growing inequality in the country. But equally, the Left has spectacularly failed to take the lead on dealing with the corruption scandal currently engulfing the Rajoy government – El País has called it “the largest corruption scandal in Spain’s democratic history” – nevermind the wider economic malaise.

As a result, Pedro Sanchez’s opposition Socialist Party (PSOE) continues to underperform in the polls – though Sanchez may yet win power through a vote of no confidence to oust Rajoy. And much of the ruling Popular Party’s (PP) disillusioned support is peeling off to the new centre-right party Ciudadanos. Indeed, a Metroscopia poll taken earlier this year found that Ciudadanos, led by the 38-year-old lawyer Albert Rivera, would receive the most votes were an election to be held today, with the party on course to secure 27% of the vote. This would be a hugely significant result for a party that was only founded in 2005.

Ciudadanos has benefited significantly from its staunch opposition to Catalonian independence and its tough talk on corruption. In Catalonia, where the party first emerged, it has taken a harder stance on immigration, and proposed burqa and niqab bans in public spaces. But it is also attracting middle class voters with a Macron-esque promise of cosmetic rather than radical change.

Perhaps emphasising the extent to which populism in Spain is increasingly dominated by the centre-right is the plight of Podemos. The insurgent left-wing party finished third with 20% of the vote at the 2015 election. It has since slipped back into fourth place and can now rely on the support of around 17% of the electorate. As I predicted for UnHerd last year, the party’s decision in 2016 to forge an electoral pact with the old Spanish Communist Party (PCE) has put a ceiling on the number of voters it could attract from the centre.

What is more, Podemos leader Pablo Iglesias has been accused of hypocrisy after it was revealed that he and his partner, the party’s parliamentary spokeswoman Irene Montero, purchased an exclusive property worth over half a million Euros situated on the outskirts of Madrid. So much for Iglesias’ – and by extension Podemos’ – wider reputation as modest, self-abnegating idealists, especially at a time when so many in Spain are struggling.

The struggle of Spain’s hard-up classes will sound familiar to many voters across Europe. But so too the inability of the Spanish Left to capitalise on the discrediting of elites – and more broadly to figure out what its purpose is in the twenty-first century.

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