Spanish political uncertainty is likely to influence investment in H1. The December general election did not result in an absolute majority for a single party nor clear government alliance/coalition. The possibility for a minority government is high rather than conducting new elections in the second quarter of 2016. Uncertainties are quite high regarding the composition of such a government, as negotiation process might prolong over the period of time.
Private consumption is seen to be moderate in 2016, as tax cuts and extra salary payment refunds to public sector employees have declined. Private consumption is seen as the main driver for economic growth, supported by strong consumer confidence, easier credit conditions and the ongoing recovery in the housing sector.
Further development in labour market conditions should aid household consumption. November and December Job market data was upbeat as the number of registered unemployed declined 55.8k and new social security affiliations increased 85.3k in December.