Spanish Socialist Prime Minister Pedro Sánchez called snap elections on Monday, October 5 for November 29, following parliament's rejection of measures aimed at curbing public outrage and mass protests over the housing crisis. Sánchez has gained both staunch supporters and fierce critics on the international stage, having emerged this year as the most vocal European critic of US foreign policy in the Middle East. For some, his warning against repeating "past mistakes" and his refusal to become "complicit in something that is bad for the world" served as a textbook example of a Europe attempting to stand up to an aggressive US administration, regardless of potential fallout. For others—most notably US President Donald Trump—Sánchez and his government went too far, with Trump accusing Spain of putting "American lives at risk" and failing to contribute adequately to NATO defense spending.
Trump: "I want nothing to do with Spain"
Donald Trump went so far as to threaten to sever trade and diplomatic relations with Spain. Sánchez—who is also a fierce critic of Israel's war in Gaza—continued his rhetorical offensive against the White House. Referring to the now-defunct ceasefire between the US and Iran, he memorably declared that he would "not applaud those who set the world on fire just because they show up holding a bucket." However, geopolitical clashes are far from the top of the political agenda in Spain this month. As in other European countries, public debate is increasingly centered on discontent over housing costs, wages, and the cost of living. At the same time, immigration is turning into a growing political battleground as the Spanish government continues to manage the fallout from the arrival of tens of thousands of migrants at the North African Spanish enclave of Ceuta in July.
The economy grows – but citizens take to the streets
In terms of core economic figures, the Spanish economy has recovered strongly post-pandemic and continues to grow faster than the Eurozone average. Growth reached 0.7% in the second quarter of 2026, while tourism performance remains robust, investor appetite for Spanish assets stays high, and the labor market is strong. However, tens of thousands of people flooded the streets over the weekend in a peak of mass demonstrations that brought together diverse political forces. On one end are left-wing housing activists who continue to organize squatting actions and protests in Madrid. On the other end, far-right activists have reportedly gone so far as to display Nazi salutes. Public anger and calls for a general strike intensified following the September eviction of an 87-year-old disabled woman who had lived in her home for 70 years. This dramatic case brought long-standing issues surrounding soaring rent prices and severe housing shortages to the surface—especially in high-tourism areas.
Sánchez's "opportunity"
Sánchez, leader of the Spanish Socialist Workers' Party, has served as prime minister since 2018. Today he leads a fragile left-wing coalition formed in November 2023, which relies on the backing of several smaller regional parties. This has made passing structural reforms exceptionally difficult, despite Sánchez's reputation as a skilled political negotiator. In fact, the ongoing parliamentary deadlock has left Spain unable to approve a new state budget for more than three years. Sánchez's popularity has taken an additional hit this year due to an investigation into alleged financial mismanagement within the Socialist Party, alongside a corruption probe involving his ally and former prime minister José Luis Rodríguez Zapatero. Zapatero has denied any wrongdoing.
The housing measures that backfired
In an attempt to address the wave of housing protests, Sánchez tried last week to fast-track a series of tenant protection measures. These proposed policies included: a suspension of evictions for vulnerable tenants until 2030, tax increases on short-term tourist rental apartments, a two-year extension for lease agreements expiring before 2028, and restrictions on residential property purchases by institutional investment firms. However, the bills were defeated following opposition from parties including the center-right People’s Party (PP), the far-right Vox, and the pro-independence Together for Catalonia (Junts). The rejection of these measures further fueled widespread public anger. Given that new parliamentary elections would have been required before August 2027, analysts expected that an early vote would come soon, Carsten Nickel, managing director at consultancy firm Consello, told CNBC.
Early elections represent a "big gamble"
"It is clear that, with this issue surrounding the housing market, [Sánchez] genuinely sees an opportunity. This does not mean he will win, but that he can consolidate the center-left vote around a topic that traditionally belongs to the center-left," Nickel stated. He added that this offers a much better political backdrop for Sánchez compared to corruption allegations or losses in regional elections. Politico polling places the People’s Party in first place regarding parliamentary voting intentions. Meanwhile, analysts at Teneo noted on Friday that opinion polls indicate a right-wing coalition of the PP and Vox could secure an absolute parliamentary majority in an election. "Over the past two months, public debate has focused increasingly on the migration crisis in Ceuta, the Spanish enclave in North Africa, as well as criticism over how the government handled it," Teneo analysts noted. "Housing is a major concern for voters and has the potential to mobilize the left-wing electorate." However, they warned that Sánchez's strategy carries significant risk. "After more than eight years in power, the government itself could be blamed for failing to resolve the housing supply shortage," they observed.
70% chance of a center-right government
Federico Santi, senior Europe analyst at Eurasia Group, estimated on Monday a 70% probability that the elections will yield a center-right majority. He cited the conservative opposition's consistent polling lead, Sánchez's low approval ratings, and the fragmentation of the left as primary drivers. However, Santi highlighted a crucial factor that could upend predictions. Sánchez possesses a "long history of turning around difficult electoral contests," having been widely expected to lose in both 2019 and 2023. Furthermore, he retains a strong ability to rally voters around a single headline political message, such as the housing issue this time around.
China and NATO stand as the two major challenges for the next government
A new center-right administration in Spain would raise a series of critical questions for financial markets and foreign investors. As Carsten Nickel of Consello told CNBC, a key question will be the new government's stance on NATO defense spending and how that will influence Spain's standing in trade relations with the US. The issue carries extra weight following the intense confrontation between Sánchez and Trump. Trump has repeatedly accused Spain of failing to contribute adequately to collective alliance defense budgets, while threatening to cut off trade and diplomatic ties.
The major front with China
Another critical question is whether a new Spanish government would overturn Madrid's current policy within the EU, which favors a less confrontational commercial relationship with China. Nickel described Spain as the "last proponent" of a softer stance toward Beijing. France and Germany have now aligned on the view that they are threatened by China's shift from customer to direct competitor in critical industrial sectors, such as automotive manufacturing. If Spain pivots in the same direction, it could trigger a "dangerous sector-by-sector retaliation cycle" between China and the European Union, Nickel warned.
The high-stakes gamble of November 29
This snap election transforms the housing crisis into the central political gamble for Pedro Sánchez. The Spanish prime minister is attempting to turn a legislative deadlock into an opportunity to re-energize his left-wing base, even as conservative parties hold a firm lead in opinion polls. The outcome, however, extends far beyond Spanish domestic politics. A potential change in government could reshape the country's commitment to NATO, its diplomatic relationship with Donald Trump's US administration, and above all, Madrid's strategic alignment toward China. In short, the November 29 elections are not merely a battle for the leadership of Spain. They mark a potential turning point for the country's geopolitical and economic trajectory within Europe—and for the global balance of power between the US, the EU, and China.
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