Doubts and concerns among Spanish employers about government formation

by Lorraine Williamson
economic stability

MADRID – The Spanish Confederation of Employers’ Organisations (CEOE) is expressing concerns about the election results. They are particularly worried about the possibility of political gridlock, new elections, or the formation of an unstable government. 

In response to the election outcome on Sunday, July 23, the Ibex index only experienced a 0.29% drop. This loss percentage was slightly higher than that of Frankfurt (0.08%), Paris (-0.07%), or Milan (+0.18%). Therefore, the CEOE calls for “responsibility to reach agreements that guarantee the highest level of stability and the necessary moderation.” 

From Catalonia, in a tweet, the employers’ organisation Foment del Treball emphasised that “the necessary political agreements should focus on economic and social challenges, the European agenda, and institutional stability.” 

Preserving economic and social progress 

In its statement, the CEOE urged for “statesmanship and respect for the constitutional framework to preserve economic and social progress.” The employers’ organisation, led by Antonio Garamendi, offered the “collaboration of businesses with a potentially formed government.” 

Cogesa Expats

The election results make it impossible for a right-wing government to form with only a pact between the winner PP and Vox, as has happened in some regional governments, due to their failure to secure an absolute majority. Therefore, the PSOE must seek cooperation with the rest of the parties if they want to have a chance to form a government again. 

Attacks on Spanish companies 

The CEOE also calls for a definitive end to attacks from the institutional sphere on Spanish companies. In recent months, some government members have questioned decisions made by companies, such as the departure of Ferrovial’s headquarters. There were also tensions between the government and major companies listed on the Ibex index regarding special taxes for energy companies and banks. 

Employers foresee a scenario of a slowdown 

The request from employers for a stable government based on agreements comes at a time when they foresee a “scenario of a slowdown” in the Spanish economy, which is expected to become more evident after the summer.” The CEOE attributed this situation to geopolitical tensions arising from the war in Ukraine, the impact of restrictive monetary policies, and high inflation. All of this affects “the consumption and investments of Spanish families and businesses.” 

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