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Prime-minister-designate Mariano Rajoy greets supporters after winning Spain's national election on Sunday, Nov. 20, 2011. He is accompanied by his wife, Elvira Fernandez Balboa, left, and Maria Dolores de Cospedal, secretary-general of the Popular Party.

Emilio Morenatti/Emilio Morenatti/AP

For a man who had just won a huge landslide, it appeared to be the shortest honeymoon period in modern electoral history.

Only hours after Spanish voters gave conservative Mariano Rajoy a record-breaking landslide majority at the polls, he found himself pummelled by markets and the media. The bearded leader of the Popular Party had ended eight years of Socialist Party rule but barely had time to dance a little jig in front of the cameras in Madrid before he was being accused of delaying his agenda.

Spain's newspapers devoted most of their pages Monday not to celebrating Mr. Rajoy's victory but to demanding that he explain his policies and put them in place quickly – and by quickly, they meant within days. Spain's borrowing costs rose to crisis levels in the lead-up to Sunday's vote, and it appeared that Mr. Rajoy might need to follow his Greek and Italian counterparts in seeking European Central Bank assistance.

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"The change that began yesterday will have to deliver concrete results as soon as possible," the conservative newspaper ABC demanded.

Hours later, the world's bond markets delivered a darker message. Spanish bond yields rose 12 basis points on Monday, to 6.56 per cent, or 4.86 per cent above the price of a German bond, putting Spain on the edge of what is usually considered the crisis point – and showing that markets were not willing to give the new Prime Minister what some investors called a "Rajoy relief rally."

Before the day after the election was half over, investors were telling him that he was moving too slowly in his reform plans.

"The market is losing patience as no tangible plan is currently on the table," Fadi Zaher of Barclays Wealth in London told the Bloomberg wire service on Monday afternoon. "Mr. Rajoy needs to find the balance between fiscal retrenchments and growth."

This means that the mere election of a leader has not been enough to reassure markets, and Mr. Rajoy will have to cut straight to the bad news: To reassure markets and prevent a run on Spanish debt, he will almost certainly have to deliver a speech to Spaniards, probably within 48 hours, in which he announces unprecedented levels of austerity and very deep cuts to social services, which appear to be his chosen way to rescue the economy.

Spain is suffering one of the highest unemployment rates in Europe, with 21.5 per cent of the working population and nearly half of all youth jobless. At the same time, it is enduring the tail end of a real-estate crash, with a million Spaniards in danger of losing their houses.

And while Spain does not have the massive levels of government debt that have crippled Greece and Italy, the rescue of failed banks and mortgages and the wider euro crisis have pushed Spain's borrowing costs up dramatically.

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While Mr. Rajoy was exceedingly vague throughout the campaign on his plans, he had made it clear that he preferred austerity over growth-boosting measures. And while he tempered this by promising tax cuts, it seems highly unlikely that Madrid can starve itself of tax revenue at the moment.

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About the Author
International-Affairs Columnist

Doug Saunders writes the Globe and Mail's international-affairs column, and also serves as the paper's online opinion and debate editor. He has been a writer with the Globe since 1995, and has extensive experience as a foreign correspondent, having run the Globe's foreign bureaus in Los Angeles and London.He was born in Hamilton, Ontario, and educated in Toronto. More

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