Madrid: Local and Regional Elections Point to Policy Continuity Re-Election of Madrid's Regional President and City Mayor

This commentary discusses the outcome of Madrid's regional and local elections that took place on 28 May 2023 explaining why DBRS Morningstar does not expect the results to have a material effect on fiscal policy nor on municipal or regional credit conditions. The conservative party Partido Popular (PP) has been leading the regional government since 1995 and the municipal government since 2019. PP has increased its number of seats at both the regional and municipal councils to absolute majorities in both cases, which means the re-election of regional President Isabel Diaz Ayuso and Mayor José Luis Martinez-Almeida. At the regional level, PP was governing with the support of VOX to pass some reforms but with broad representation of 65 seats out of 136. At the municipal level, a coalition of PP and Ciudadanos was governing, but after the drop of representation of Ciudadanos, the PP has absorbed most of these votes.

For both Madrid city and region, the leaders have been re-validated and their political programs point to a continuation of policies. The current inflationary context and the need to rebalance the budget after last year's broader financing deficit remain the most notable challenges for the Madrid regional and local governments.

Key Highlights include:
• Change of Government With the Same Leading Party for the City of Madrid.
• Isabel Diaz Ayuso Will Lead the Regional Parliament With Full Maneuverability.
• Madrid Election Results Should Translate Into Continuity of Fiscal Policy and Contribute to the Capacity to Execute NGEU Investments in the Short Term.

“We expect policy continuity both at Madrid’s regional and municipal government,” said Jorge Espinosa, Assistant Vice President in the Global Sovereign Ratings Group. “The absolute majority would provide broader maneuverability for management to implement policies and perhaps even speed up NGEU investments”.