Catalan polarisation will increase in Spanish politics

Significance

Sanchez’s Socialist Party (PSOE) will form a minority government with the left-wing Sumar party in the wake of July's election. The government’s survival is contingent on the support of separatist parties including Carles Puidgement’s Together with Catalonia (JxCat), which supported Sanchez’s investiture in return for an amnesty for Catalan pro-independence activists and politicians.

Impacts

• Spain will continue to see confrontations between the government and the judiciary, whose governing body remains conservative.
• Polarisation over Catalonia is giving extreme right groups an opportunity to engage in street violence.
• Windfall taxes on banks and energy firms will likely remain as Madrid needs funds to finance higher minimum wage and shorter working week.