Spanish PM Rajoy forms a cabinet with an expanded role for economy minister Luis de Guindos. But as Ivor Bennett reports, the new minority government is already running into opposition accusations that it's closed to dialogue - but not to austerity.
It had a feeling of the first day back at school. Only in this case the holiday had been 10 months. The novelty of forming a new cabinet even enjoyed by those who've been here before. But markets don't share the same excitement. SOUNDBITE (English) JASPER LAWLER, MARKET ANALYST, CMC MARKETS, SAYING: "Spain's economy's done better without a government than it did in the multiple years with a government. Obviously that can't continue ad infinitum but i don't think the short-term policies are going to be the biggest factor." The opposition also has its doubts. Most of the posts are filled by members of Rajoy's Popular Party. A sign, they say, of more spending cuts. This was the moment that was supposed to end the deadlock. But the support that gave Rajoy the chance to govern could now be on the line once more. SOUNDBITE (English) JANE FOLEY, RABOBANK, SAYING: "There is the possibility that this government could succeed but quite clearly this is going to be a testing time and it's far from clear that this budget will get through and that the Rajoy government will have the substance to sustain." Luis de Guindos is the man tasked with pushing through the budget. Staying on as Economy minister. Having steered Spain towards a recovery, it's where he'll take it next that matters. SOUNDBITE (English) JANE FOLEY, RABOBANK, SAYING: "Certainly if you have a scenario where there is improvement in terms of employment opportunities, if there were to be improvements in wage growth etc., a better more comfortable economic environment, there is likely to be less dissent and potentially more support." But if Spain's to meet its budget deficit target, de Guindos may need to find another 5 billion euros. Austerity will not be a popular pill.