Despite the ongoing surge in Covid-19 cases across the country, the Socialist Workers’ Party (PSOE)-Unidas Podemos government is unlikely to re-impose a nationwide lockdown anytime soon. As previously explained, Prime Minister Pedro Sanchez will continue letting the regions manage the pandemic, so that they assume the political costs of implementing unpopular measures. On the economic front, the 2021 budget is unlikely to be approved before the end of the year. Although it is still unclear whether Sanchez will have the necessary support in parliament to get it passed, a collapse of the government is unlikely in any case given the ongoing health crisis.
The relationship between the central government and the Madrid region regarding the recent surge in Covid-19 cases signals how Sanchez will continue to handle the issue. Madrid Prime Minister Isabel Diaz Ayuso (from the opposition People’s Party) was one of the most critical voices of the central government during the first months of the pandemic. But Madrid has been one of the regions the worst affected by the virus since regional authorities regained the competences to manage the pandemic in June. As a result, Diaz Ayuso has been under pressure to adopt measures to stop the spread of the virus.
With Covid-related restrictions becoming increasingly unpopular, however, Diaz Ayuso has tried to spread the political pain by asking the central government to become more involved in containing the virus. But despite a bilateral meeting this week in which both politicians agreed to improve the communication between the central and the regional authorities, it is unlikely that the central government will adopt any material decisions regarding Madrid. Rather, Sanchez will let regional leaders take responsibility for any controversial measures, including eventually asking the central government to impose regional lockdowns if necessary.
Meanwhile, the government is expected to present a draft 2021 budget in October, which would push its approval in parliament to late December/early January. Finance Minister Maria Jesus Montero has said parliament will probably vote on the revised expenditure ceiling – which precedes the formal presentation of the budget – at the end of this month. It is only then that the government will adopt the draft accounts and send them to the Congress of Deputies.
As explained in previous pieces, Sanchez needs the support of several parties to get the accounts passed. The PSOE-Podemos government is keeping its options open, simultaneously courting parties with disparate ideologies such as Ciudadanos and the secessionist Republican Left of Catalonia (ERC). For instance, the minister of justice announced today a reform of the criminal code that could reduce the sentences of the secessionist politicians currently in prison. The risk for Sanchez is that these decisions push Ciudadanos away while not being enough for ERC to support the budget.
Regardless, it is unlikely that a failed budget vote would lead to the collapse of the government since the ongoing health crisis gives Sanchez cover to avoid calling early elections. The future inflow of EU money from the Resilience and Recovery Facility also creates an incentive for the government to stay in power to spend as much of the funds as possible. Moreover, the right-wing opposition remains fragmented and unable to force a change of government. In sum, there will likely be no alternative to Sanchez in the coming months.