Spain's acting Socialist Prime Minister Pedro Sánchez is set to be sworn in as head of the country's first coalition government after narrowly surviving a confirmation vote in parliament, Reuters and the Financial Times reported.
Spanish lawmakers voted 167-165 to confirm Sánchez as prime minister as his Socialist party secured the abstentions of those aligned with Catalan and Basque separatists.
The Socialists and the left-wing Unidas Podemos party, which together hold 155 out of 350 seats in the Spanish Chamber of Deputies, are set to form a coalition government with priority programs ranging from tax hikes on the wealthy and on companies to a rollback of labor measures approved by the previous conservative government, according to Reuters.
S&P Global Ratings said the formation of the new Spanish government would have no immediate impact on Spain's sovereign credit ratings, even as coalition members have expressed support for increased social spending. The rating agency noted support among Spain's main political parties for Madrid's continued adherence to eurozone economic and budgetary frameworks.
The rating agency said it does not expect Spain to adopt major changes in economic and fiscal policy or undo past reforms. However, it warned against any delay in implementing policies that seek to address Spain's existing economic challenges, which include an existing budget deficit made worse by a financing gap in the country's social security system.
"The fragility of the new government's mandate raises questions about the pace of future policy reforms, including those aimed at improving the labor market or reducing the budget deficit," S&P Global Ratings said.
S&P Global Ratings pointed to the independence movement in Catalan as an enduring source of political tensions, which have not weighed on Spain's economic performance so far.
The Spanish economy is expected to grow by about 1.7% in 2020, higher than the 1.0% expansion projected for the eurozone for the year, according to the rating agency.