Spain to welcome new government after 10 months of deadlock

Spain's Popular Party will return to power, albeit in a minority government, after the country's second largest party, the Socialist PSOE, voted to allow current interim prime minister Mariano Rajoy to govern.

The opposition Socialists had the option of forcing a third election in 12 months, or allowing the PP to form a government. The party had previously had internal infighting of its own, which led to the departure of leader Pedro Sanchez.

Socialist delegates voted 139 to 96 at a special congress on Sunday to abstain in an upcoming confidence vote.

Decades of traditional two-party rule in Spain was broken by the emergence of new parties "Podemos" and "Ciudadanos", who have haemorrhaged millions of votes to leave a hung parliament in Madrid.

Speaking in the capital at the weekend, Rajoy said he was glad that the dispute had been resolved.

"Soon we will have a government that is open to dialogue and understanding, that will uphold the law and make sure it's upheld," said Rajoy.

The new minority government is likely to face a turbulent four years attempting to force through its legislation as it will no doubt face opposition from various factions within the chamber.

Spain is slowly emerging from an economic downturn as its unemployment edges down and growth has been steady at 3% since 2015. A significant budget deficit still remains however, and it will face pressure from the EU to reduce it.