Spain's Far-Right Vox Party Secures First Regional Coalition Deal With Conservatives

Vox and People’s Party Forge First Regional Coalition, Shaping Spain’s Finance Policy

Coalition Agreement and Its Impact on Spain's Finance and Policy

By Victoria Waldersee

Background of the Coalition Deal

MADRID, April 17 (Reuters) - Spain's far-right party Vox and the mainstream conservative opposition People's Party have struck a preliminary deal to govern in coalition in Extremadura in the first of three regional deals being negotiated that could test the ability of the right-wing alliance to oust the ruling Socialists in the next general election.

Vox’s Previous Stance on Regional Governments

Vox had previously pulled out of five regional governments in 2024 in protest at the PP accepting the distribution of unaccompanied migrant minors around the country including in regions their coalitions governed.

Influence Over Immigration Policy

In a sign of Vox's growing influence over immigration policy, the latest deal says a future PP-Vox government will "oppose by all means necessary" any further such distribution of undocumented migrants including minors.

Political Implications and Voter Sentiment

The success or failure of this second attempt at joint governance will be closely watched by voters who are considering supporting an alliance of the two parties in the next national election, which Socialist Prime Minister Pedro Sanchez must call before June next year. 

Polls currently suggest the PP and Vox are the only pairing able to form a majority, with the two parties expected to garner a combined 51.4% of votes compared to just 27.7% for the Socialists and roughly 8% for smaller parties further left, which have taken a battering in regional elections.

Economic and Sectoral Impacts

Regional Economic Significance

'BLANK CHEQUE'

The three regions of Aragon, Extremadura and Castille and Leon, together home to roughly 10% of Spain's population, are major agricultural producers with billions pledged by U.S. and Chinese firms in industrial investments in coming years, including in data centres and battery production. 

Renewable Energy and Climate Policy

Extremadura also hosts renewable energy production sites, including Europe's largest solar facility, that are likely to come under scrutiny by Vox, which opposes the European Green Deal and climate protection policies.

Vox’s Role in Regional Ministries

Though the PP will take the presidency and most ministries in Extremadura, Vox will lead the agriculture ministry as well as the family ministry, granting it greater control over important areas for its voter base.

Key Points of the Coalition Deal

The coalition deal includes opposition to large renewable projects on agricultural land and a pledge to push to keep open the Almaraz nuclear plant, currently slated to close by 2028.

Finance and Social Policy Measures

A future Vox-PP government would cut regional taxes for lower-income earners, expand inheritance tax breaks and prioritise access to public services and housing for nationals or those with a "real, lasting and verifiable connection to the territory," according to the deal.

Reactions and Future Outlook

The Socialist government has accused the PP of writing Vox a "blank cheque" to get deals done. PP leader Alberto Nunez Feijoo argues an alliance is the only democratic solution given Vox's position as Spain's now third-largest political force.

(Reporting by Victoria Waldersee, editing by Aislinn Laing, Kirsten Donovan)