“This government will be the best vaccine against the far right.” So claimed Unidas Podemos leader Pablo Iglesias on November 12 as he reached an initial agreement to form a coalition with the center-left PSOE. The deal was signed just two days after Spain’s snap general election — the fourth such contest in four years. But the election results weren’t all good news; in fact, they saw an unprecedented surge for the far-right Vox party, as well as high abstention among left-wing voters.

In this context, the new governmental pact is an achievement for Podemos, but also a rather precarious one. Talks over a more detailed program for government are still ongoing — PSOE leader Pedro Sánchez also still needs to secure the votes of the Catalan and Basque regionalist parties if he is to be voted back into the prime minister’s office. Yet the signs are that by Christmas Spain could have its first left-wing coalition since the Second Republic in the 1930s.

The European Union and Spain’s corporate elites have been swift to rein in any potential signs of a turn to the Left. Last week the European Commission’s finance chief Pierre Moscovici called for new “structural reforms” in the face of a possible economic slowdown, as well as €6.2 billion further cuts in 2020. His message to the future government: “you can be serious and left-wing too.” Meanwhile the head of the CEOE (Spain’s business association) warned that “ideological formulas [for government] rather than practical ones, would not be beneficial for the economy or businesses.”