Election inevitable as Catalonia fails to agree on leader

Spain’s acting prime minister, Mariano Rajoy, said a new regional election in Catalonia was inevitable. Its pro-independence bloc has fractured over who would be the new government’s leader.

Catalonia has been unable to form a government since an election in September, due to disagreements between the pro-independence parties, who together gained a majority.

If a new candidate is not chosen before January 11, new regional elections will be called, acting regional head, Artur Mas, told a news conference.

The most likely date would be March 6.

The failure to form a Catalan government mirrors the political stalemate across Spain caused by the inconclusive national election on December 20, and increases the likelihood all Spaniards will return to the ballot box this year.

“I sincerely don’t know what could possibly happen in the next five days, but I believe that the best that could happen is that Mas drops his independence drive and, as that doesn’t seem possible, there’s no alternative to elections,” Rajoy said in a radio interview.

Bond markets reacted positively to the bloc’s division, with Catalonia’s five-year bond yield falling to a three-week low on Tuesday, a few basis points away from is lowest level in around five months.

“Short-term, the disagreement is a positive, as it delays any independence plans, and potentially pushes for new elections,” said Alberto Gallo, head of global macro-credit research at RBS.