Heads begin to roll in aftermath of European election shock

As might be expected after some shocking showings in the European Parliament (EP) elections, the heads have begun to roll – and rightly so, some would say.

The most high profile resignation so far is that of the Spanish opposition Socialist leader Alfredo Pérez Rubalcaba (pictured) who stepped down yesterday after his party’s vote share dropped to 23% from 39% in the previous EP election. His decision is not exactly a surprise as many have been scratching their heads over the opposition’s lack of penetration despite numerous opportunities including (but not limited to) the Spanish economic malaise, austerity and Partido Popular’s top level corruption scandal. Where the party goes from here remains to be seen but with the rise of regional (particularly Catalan) parties and the new Podemos movement (see our profile here) the party needs to reassert itself as the primary opposition.

Similarly, a poor showing by the Romanian opposition party saw its leader Crin Antonescu resign along with all the party’s executive bureau. Interestingly, the party has also voted to switch from the liberal ALDE grouping in the EP to the centre-right EPP.

Meanwhile, in Ireland, Labour leader Eamon Gilmore jumped before he was pushed after his party secured barely 7% of the vote – likely paying the price for being the junior coalition partner during a difficult period of government (similar to Lib Dems in the UK or PASOK in Greece). This paves the way for a cabinet reshuffle, but again his replacement is also still unclear.

Other scalps include Igor Lukšič, President of the Slovenian Social Democrats, who has bitten the bullet and stepped down, as well as the leader of the Hungarian Socialists, Tibor Szanyi, who offered his resignation (subsequently accepted) after his party was comfortably beaten by the neo-fascist Jobbik.

There could still be more to follow as the dust settles. But more importantly than those who have lost their heads is for those that just clung on to theirs to get the message and begin pushing for some serious reform across Europe and offering a clear alternative to those who still do not.

Meet Podemos, the great newcomer of the European elections

The European Parliament elections have dealt a blow to Spain's traditional two-party system. Together, Prime Minister Mariano Rajoy's Partido Popular (PP) and the opposition Socialist Party (PSOE) won 49% of votes. In 2009, their combined score was 80.9%. No wonder Socialist leader Alfredo Pérez Rubalcaba has decided to step down following his party's poor showing.

But the big story coming out of Spanish ballot boxes is the success of Podemos (We Can), a new left-wing, anti-austerity movement that came from nowhere to become Spain's fourth largest party and win five seats in the new European Parliament.

And 'nowhere' really means 'nowhere' in this case. Podemos was officially registered as a political party in March 2014 - which makes its performance extraordinary. Its leader, 35-year-old Pablo Iglesias (see picture), is a Political Science professor but also a bit of a TV star in Spain. Interestingly, his parents called him Pablo so their son could bear the same name as Pablo Iglesias, the founder of the Spanish Socialist Party.

Factoids apart, we have been flicking through Podemos's European elections manifesto. The following bits give a good feel for what Podemos stands for in a number of policy areas:

• "Citizens' audit of public and private debt to find out what parts of it can be considered as illegitimate...and declare that those won't be paid back."

• "Creation of democratic and parliamentary control mechanisms for the European Central Bank...Creation of a European public credit rating agency."

• "Regain public control over strategic sectors of the economy: telecommunications, energy, food, transport, health, pharmaceutical and education."

• "Budgetary support for and increased development of public R&D centres, in order to favour the return of Spanish researchers and scientists from abroad."

• "Right to a basic income for each and every citizen, for the mere fact of being citizens" - which sounds a lot like the 'citizenship wage' advocated by the Five-Star Movement in Italy.

• "A moratorium on mortgage arrears for the first houses of families with difficulties in paying their loans back."

• "Increase the EU's social budget, and establish a levy on capital movements within its boundaries" - which basically means saying adiós to free movement of capital. Podemos also calls for a "bigger levy" on movements of capital from the EU to third countries.

• "Establishment of trade agreements among small producers in Southern European countries. Development of specific cooperation mechanisms among Southern European countries." On the other hand, Podemos wants to "abandon" negotiations over the EU-US free trade agreement (TTIP), and calls for a "substantial revision" of the existing EU-Latin America free trade deals.

• "A derogation from the Lisbon Treaty so that public services are exempted from the competition principle." 

• "Stop the use of Memoranda of Understanding" - which set out the conditions attached to EU-IMF bailout loans to struggling eurozone countries.

Call it left-wing, anti-establishment, anti-austerity (but clearly not anti-EU), the rise of Podemos is significant because - similar to what the Five-Star Movement has done in Italy - it can give Spaniards a channel through which they can voice their dissatisfaction with the political establishment (and the current eurozone economic policies), something which has been lacking at the peak of the eurozone crisis.

In an interview with today's El Mundo, Pablo Iglesias has refused to reveal whether he and his movement will stand in next year's Spanish general election. For now, though, it seems Beppe Grillo may just have found someone to work with in the new European Parliament.

Services liberalisation: David Cameron has one more reason to love Spain

We reported in today's press summary that Spain's Prime Minister Mariano Rajoy and opposition leader Alfredo Pérez Rubalcaba have agreed to adopt a common position ahead of the 27-28 June EU summit. The full document - a draft resolution due to be voted on by the Spanish parliament a couple of days before the summit - is now available online.

We found the following paragraph very interesting (the emphasis is ours). The Spanish parliament urges the government to,

"Favour progress on the completion of the internal market through the swift adoption of the pending legislative proposals under the Single Market Act I and II. Particular attention shall also be paid to the full and effective implementation of the Services Directive."

We couldn't agree more. As we stressed in a recent report, the services sector represents a huge untapped source of growth for the EU. A quick reminder of the figures we're talking about:

• Further liberalisation of services by fully implementing the existing Services Directive and implementing a new 'country of origin' principle would result in a permanent boost to EU-wide GDP of up to an extra €294 billion a year;

• If Spain, the UK and the other ten EU countries that signed a 'pro-growth letter' in February 2012 decided to press ahead among themselves and open up their services markets under the so-called 'enhanced cooperation' procedure, this would still drive EU-wide GDP up by some €148 billion a year.

¿Por qué no?