Far-right groups clashed with Spanish police in Madrid on Tuesday during a protest demanding the government's resignation following a high-speed train crash in Galicia that killed at least 68 people and injured dozens. Police used batons and tear gas to disperse demonstrators near the Parliament building, resulting in several minor injuries among protesters and officers.
Thousands of protesters gathered in Madrid's Puerta del Sol square carrying nationalist flags and anti-government banners. Organizers blamed government negligence and inadequate safety protocols for the crash, which occurred on a newly constructed high-speed line.
The political upheaval now tests Spanish sovereign debt. Spanish 10-year government bond yields typically rise during domestic political crises as investors demand a higher risk premium. The spread against benchmark German Bunds—already elevated relative to the pre-2015 baseline—risks widening further if the government's stability deteriorates. Higher borrowing costs for Spain would strain public finances as the country manages its post-pandemic fiscal recovery.
The Spanish Parliament is scheduled to debate a no-confidence motion against the government next Tuesday, a vote that requires an absolute majority to pass. The Ministry of Transport will release its preliminary crash investigation report Friday. Both events will signal whether the government can contain the political fallout and restore market confidence.
