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People's Party leader Mariano Rajoy (C) waves to supporters
The victory of Mariano Rajoy, the centre-right leader of Spain’s Popular Party in Sunday’s parliamentary election has failed to reassure financial markets. Madrid’s stock market fell two per cent on Monday as Rajoy starts the task of convincing global markets he can reduce the country’s huge budget deficit.
Spanish government borrowing also rose on Monday with the yield on 10-yeargovernment bonds up to 6.406 per cent, close to the danger figure of seven per cent.
Dossier: Eurozone in crisis
Voters handed the ruling Socialists their biggest defeat in history in an election chasing them from seven years in office after an economic boom went sour and the unemployment rate shot to 21.5 per cent - among the highest in the industrialised world.
With almost all the votes counted, Rajoy’s Popular Party had 44.60 per cent of votes giving him 186 seat in the 350 member Congress of Deputies, the Socialists have 110 seats and, in a sign of frustration with the two big parties, the United Left coalition of lefts and greens won 11 seats.
Rajoy, who will be sworn in on 20 December, has vowed to make cuts everywhere except for pensions to meet Spain’s target of cutting the public deficit to 4.4 per cent of GDP in 2012 from nine per cent last year.