Sánchez calls Spain's election for November 29, nine months early

Prime Minister Pedro Sánchez on Monday called a general election for Sunday, November 29, 2026, and moved to dissolve parliament nine months before its term was due to end.

"We need a much broader progressive majority," he said. "It's time you, the Spanish people, decide which future you want for yourselves and for the country."

Congress had rejected two housing decrees on Friday, the government's answer to protests over rents and evictions. Over the weekend the Tenants Union said 500,000 people marched in Madrid. The government delegation counted 70,000. The protests followed the September eviction of an 87-year-old woman from the Madrid home she had lived in for more than 70 years.

Spain's statistics office estimated September inflation at 4.9%, up from 4.3% in August.

The first decree fell by 178 votes to 172. The People's Party, Vox, the Catalan party Junts and the Navarrese party UPN voted no. The second fell by 184 votes to 166, and the Basque Nationalist Party and Coalición Canaria joined them. The measures would have extended protections against eviction, tightened short-term rentals and lengthened some rental contracts.

Sánchez had informed King Felipe VI, and a special cabinet meeting was called the same morning to make the dissolution formal. Bills still before parliament then fall away, and the government remains in office with limited powers until a new one is formed.

The prime minister's office said the cabinet plans to approve the housing decrees again on Tuesday and send them to the standing committee that can still vote after parliament is dissolved. There, Junts would not be needed to pass at least one of the two.

Spain also enters the campaign without a budget for 2026. As of late September it was still spending under extensions of the 2023 budget. The parliament Sánchez is dissolving never passed one.

"This is about Spain beating Sánchez and what he represents," said Alberto Núñez Feijóo, leader of the People's Party. He cast the choice as "corruption or change."

A survey published Sunday by the pollster SocioMetrica, before Sánchez spoke, projected 205 seats for the People's Party and Vox together, more than the 176 needed for a majority in the 350-seat Congress. Sánchez's Socialists and Sumar, his coalition partner, were projected at 112 seats between them, before any other parties. Sánchez asked for a broader progressive majority. The majority in that projection belonged to the People's Party and Vox.

France set the wider premium

Around midday, Spain's 10-year yield was 4.12%, up from 4.09% at Friday's close, and the premium over Germany, the extra yield on Spanish debt, was 65.5 basis points. Through the session that premium was 3 basis points wider. France's premium over Germany was 5 basis points wider, above 150 basis points and the widest since 2011. The readings were not taken at the same minute. Spain's gap was still less than half of France's.

Early Monday the euro touched $1.1161, its lowest against the dollar since May 2025, and then recovered. By 12:35 p.m. in Madrid it was at $1.1255. Kathleen Brooks, research director at XTB, said France was the center of the concern, and that Spain's early election added to it.

The IBEX 35, Spain's main stock index, went flat right after Sánchez spoke. Its low was 19,013, under Friday's close, and by 1:35 p.m. it was up 0.9%. Around noon, Paris was down 1.1%. Santander was up 2.9% and Merlin Properties was up 2.8%. Iberdrola was up 0.5%, while Acciona was down 2.8% and Solaria was down 4.1%.

US markets were still closed, so the fund that holds Spanish stocks, BEWP, was still at Friday's close of $58.31.

Beside a French premium last this wide in 2011, and a euro that had already touched a 17-month low, Spain's bonds barely moved.