Spain's prolonged political impasse will have a negative effect on the country's economy, according to Moody's Investor Service.
Sarah Carlson, Senior Vice-President at Moody's Investors Service, said on Monday that the prolonged political impasse was "credit negative for the Spanish sovereign" after acting Prime Minister Mariano Rajoy failed to get enough parliamentary support to lead a new government in two separate votes last week.
In a note on the political deadlock in Spain, Moody's Carlson warned that the economy – which has staged a strong recovery since Europe's financial crisis – would suffer.
"The economic and fiscal costs stemming from the ongoing leadership vacuum are rising and Moody's expects both weakening growth and continued fiscal underperformance heading into 2017."
That's bad news for Spain, which has managed to bounce back from its own financial collapse just a few years ago following the country's property boom and subsequent bust. In fact, it is one of the euro zone's most robust economies of the moment, its gross domestic product (GDP) expanding 0.7 percent quarter-on-quarter in the second quarter this year, beating Germany, the U.K., France and Italy, according to the latest European Commission data.