Madrid – Prime Minister Pedro Sánchez remains in office despite mounting corruption allegations and a judicial investigation into his wife’s business dealings. The instability has prompted the British Foreign Office to issue a travel and investment advisory for Spain, citing risks to contract enforcement and regulatory predictability.
Sánchez’s minority coalition government has faced repeated calls for his resignation since March, when a Madrid court opened a preliminary inquiry into suspected influence-peddling involving his wife, Begoña Gómez. Sánchez briefly stepped back from public duties in April, but ultimately chose to remain in power, denouncing what he called a “harassment campaign” by right-wing adversaries.
The political crisis has deepened divides within Sánchez’s own Socialist party and its coalition partners. Catalonian separatist parties, whose parliamentary support is essential for passing legislation, have signalled they may withdraw backing unless Sánchez concedes further autonomy concessions. Any collapse of the coalition would trigger a general election, likely favouring the centre-right Partido Popular and the far-right Vox party.
British businesses with exposure to Spanish infrastructure, renewable energy, and tourism sectors are being urged to review their risk assessments. The advisory notes that regulatory delays and policy reversals have increased since 2023, with several energy projects facing retrospective tariff changes. “Political uncertainty in Spain presents a material risk to long-term contractual stability,” the advisory states.
Sánchez has sought to project normalcy, hosting a summit with Nordic leaders in Madrid this week and announcing a €10 billion plan to modernise Spain’s rail network. Analysts, however, point to declining popular support: a recent CIS poll showed the Socialists trailing the PP by 5 points.
Judicial scrutiny of the prime minister’s circle is intensifying. Spain’s anti-corruption prosecutor has requested further documents related to Gómez’s consultancy work and her ties to a tourism company that received government pandemic relief funds. Sánchez’s office has dismissed the investigation as politically motivated.
International investors have begun hedging their bets. The IBEX 35 index fell 2.3% over the past month, underperforming European peers. Yields on Spanish 10-year bonds rose 15 basis points relative to German bunds, reflecting heightened risk perception. Credit rating agency Moody’s warned that prolonged political gridlock could weaken Spain’s fiscal outlook, though it maintained its Baa1 rating for now.
The British advisory also cautions travellers to avoid political demonstrations, which have occasionally turned violent in Barcelona and Madrid. Protests organised by farmers and transport workers over fuel costs and EU regulations have added to a sense of societal fraying.
For Sánchez, the immediate calculus is survival. He has called for a vote of confidence in his government in July, hoping to rally his fractured coalition. But with opposition parties preparing a corruption inquiry and separatists demanding a binding independence referendum, the prime minister’s grip on power appears increasingly tenuous.
Analysts at Control Risks, a geopolitical consultancy, assess a 40% probability of early elections before year-end. “Sánchez’s strategy of endurance may buy time, but it deepens the underlying fractures,” said a senior analyst. “British investors should plan for disruption in energy and infrastructure contracts regardless of the immediate political outcome.”
