Spain's ruling Socialists suffered a crushing defeat to conservatives in local and regional elections, yielding power even in traditional strongholds against a backdrop of staggering unemployment and unprecedented sit-ins by Spaniards furious with what they see as politicians who don't care about their plight. 
 
 Spain's Prime Minister Jose Luis Rodriguez Zapatero stops to talks with journalists after voting at a polling station in Madrid Sunday May 22, 2011. The ruling Socialist Party is bracing itself for stinging... (Associated Press) 
 
 Nuns vote at a polling station in Madrid Sunday May 22, 2011. The ruling Socialist Party is bracing itself for stinging losses as voting begins amid protests in regional and municipal elections throughout... (Associated Press) 
 
 A man votes with a sticker on his shirt reading ' We are Indignant, Take to the streets' at a polling station in Madrid Sunday May 22, 2011. Protesters camped out in the central Puerta de Sol square... (Associated Press) 
 
 Spain's conservative opposition leader Mariano Rajoy stops to talk to the press outside a polling station after voting in Madrid Sunday May 22, 2011.The ruling Socialist Party is bracing itself for stinging... (Associated Press) 
 
 An official checks Spain's Prime Minister Jose Luis Rodriguez Zapatero's identification before voting, with his wife Sonsoles Espinosa at left, at a voting centre in Madrid, Sunday May 22, 2011. The ruling... (Associated Press) 
 
 Spain's conservative opposition leader Mariano Rajoy prepares to vote accompanied by his wife Elvira Fernandez, left at a voting centre in Madrid Sunday May 22, 2011. The ruling Socialist Party is bracing... (Associated Press) 
 
 People take part in a demonstration in Madrid, Sunday, May 22, 2011. Thousands of Spaniards defied a ban on a pre-election demonstration and have mounted a protest camp in the heart of the Spanish capital... (Associated Press) 
 
 Monks from the Carthusian Monastery of Miraflores check their voting slips at a polling station in Burgos, northern Spain Sunday May 22, 2011 during Spain's regional and municipal elections. The ruling... (Associated Press) 
 
 Monks from the Carthusian Monastery of Miraflores vote in Burgos, northern Spain Sunday May 22, 2011 during Spain's regional and municipal elections. The ruling Socialist Party braced itself for stinging... (Associated Press) 
 
 Demonstrators sleep on the ground as they spend the night at Sol square during a protest in Madrid, Sunday May 22, 2011. Thousands of Spaniards defied a ban on a pre-election demonstration and have mounted... (Associated Press) 
 
 Spain's Prime Minister Jose Luis Rodriguez Zapatero, centre and his wife Sonsoles Espinosa arrive to vote at a voting centre in Madrid Sunday May 22, 2011. The ruling Socialist Party is bracing itself... (Associated Press) 
 
 Demonstrators spend the night at Puerta del Sol Square during a protest in Madrid, early Sunday, May 22, 2011. Thousands of Spaniards defied a ban on a pre-election demonstration and have mounted a protest... (Associated Press) 
 
 A man sleeps at Puerta del Sol square during a demonstration in Madrid, Sunday, May 22, 2011. Thousands of Spaniards defied a ban on a pre-election demonstration and have mounted a protest camp in the... (Associated Press) 
 
 A man picks up a voting slip at a polling station in Madrid Sunday May 22, 2011.The ruling Socialist Party is bracing itself for stinging losses as voting begins amid protests in regional and municipal... (Associated Press) 
 
 Spain's conservative opposition leader Mariano Rajoy leaves a polling station after voting in Madrid Sunday May 22, 2011. The ruling Socialist Party is bracing itself for stinging losses as voting begins... (Associated Press) 
 
 A girl sweeps the camping zone during a demonstration in Madrid, Sunday, May 22, 2011. Thousands of Spaniards defied a ban on a pre-election demonstration and have mounted a protest camp in the heart... (Associated Press) 
 
 Prime Minister Jose Luis Rodriguez Zapatero said the result Sunday was due punishment of his government for the state of the economy _ the jobless rate is a eurozone high of 21.3 percent. But he said he had no plans to move up general elections, which must be held by March of next year, and pledged to press on with job-creating reforms despite the loud outcry of opposition to his party. 
 
 The win for the conservative opposition Popular Party puts it in even a stronger position to win the general elections and return to power after eight years of Socialist rule. 
 
 In what Spanish media said was the worst performance on record by the Socialist Party in local and regional elections, the numbers reflecting the loss were stunning: the conservative Popular Party won at the municipal level by about two million votes, compared to 150,000 in its win in 2007, and in 13 regional governments that were up for grabs, Zapatero's party lost in virtually all of them. 
 
 One was Castilla-La Mancha in central Spain, where the Socialists have always held power. The Socialists also lost bastions like the town halls in Barcelona and Seville. The conservatives padded their majorities in Madrid and Valencia, in the latter even though the president is under investigation for corruption. Several other Socialist-controlled regional governments also fell. Spain's electoral map turned largely blue _ the color of the Popular Party. 
 
 Zapatero attributed the results to the state of the economy, which is struggling to shake off nearly two years of recession, and conceded many Spanish families are suffering. But he did not mention snowballing protest rallies that have riveted Spain for the past week and filled squares in Madrid and other cities. Organizers voted Sunday to keep at it another week at least. 
 
 "It is reasonable to expect that the Socialist party be punished today at the polls. We accept this and we understand it," Zapatero said at a gloomy Socialist Party headquarters, flanked by top ministers including Finance Minister Elena Salgado. She has spearheaded government efforts to prevent Spain's bloated deficit and shaky banking sector from dragging Spain further into the European debt crisis and need a bailout like Greece, Ireland and Portugal. 
 
 The Socialists had widely been expected to do poorly Sunday. 
 
 But one surprise did come in the Basque region, where a nationalist coalition called Bildu _ which includes candidates whom police had linked to the banned political wing of the armed separatist group ETA but were allowed by Spain's highest court to run anyway _ had won a significant number of seats in the town halls of three of the region's provincial capitals. 
 
 ETA declared a permanent cease-fire in January. Critics did not want Bildu to be allowed to run and will now complain that ETA has retained a voice in Spanish politics. 
 
 As results were tallied and afterward, merry crowds gathered outside Popular Party headquarters in Madrid, while virtually no one was outside the Socialist headquarters. 
 
 The election came against a backdrop of widespread discontent. 
 
 Protest camps of mainly young people sprang up in cities around the country a week ago and stayed put, swelling to tens of thousands of demonstrators in the evenings. On Saturday they defied a government ban on gatherings the day before an election. The growing protest movement reflects the strong disillusionment felt by Spaniards toward a political system they say favors economic interests and political fat cats in both major parties on the right and left over ordinary people. 
 
 The government did not disperse the demonstrators, including the largest group camped out in Madrid's central Puerta del Sol square opposite city hall. Protesters on Sunday voted to stay in that square until at least May 29. 
 
 "Our zeal to press on is at maximum level," said a spokesman, Francisco Minarro, 32. 
 
 But Charles Powell, a political scientist at San Pablo-CEU University, said he thought these protests had "no impact at all" on the elections, citing the fact that turnout was about the same as in 2007 _ 65 percent or so _ and that the protests will soon peter out now that the local elections are over. ||||| Spain’s Socialists suffered their worst electoral defeat in more than 30 years as voters punished Prime Minister Jose Luis Rodriguez Zapatero’s party for soaring unemployment and spending cuts that aimed to shield the country from Europe’s debt crisis. 
 
 With 91 percent of votes counted, the opposition People’s Party won 38 percent of the vote in municipal elections, compared with 28 percent for the ruling Socialists, the Interior Ministry said. The Socialists lost control of Barcelona, the country’s second-biggest city, for the first time since 1979. Regional election results weren’t yet available. 
 
 “Tonight will not be a good night for the Socialist party,” Elena Valenciano, the spokeswoman of the party’s electoral board told reporters in televised comments after polls closed at 8 p.m. in Madrid. 
 
 The transfer of power in the regions threatens to revive concerns over Spain’s budget deficit as newly elected officials may reveal weaker finances than their predecessors reported. The defeat, capping a week of street protests, may further weaken Zapatero as he seeks to convince investors he can tame the euro- region’s third-largest budget shortfall and avoid following Greece, Portugal and Ireland in accepting a bailout. 
 
 Zapatero, who leads a minority government, has said he won’t seek a third term in general elections next year and the Socialists’ succession battle is due to start this week. 
 
 Catalan Example 
 
 After elections in Catalonia last year, the new government said the deficit would be 60 percent wider than previously forecast, undermining confidence in regional governments that together have 115 billion euros of debt. 
 
 New administrations in the regions, which control health and education spending and hire half of all public workers, will also have to implement spending cuts postponed during the campaign period, said Angel Laborda, chief economist at Madrid- based Funcas, the savings-bank foundation. Standard & Poor’s cut Catalonia’s credit rating on May 19, because of its swelling debt and deficit, and said it may reduce the grade further. 
 
 Maria Dolores de Cospedal, the PP’s candidate in Castilla- La Mancha, had pledged an “audit” of the region, which she said was “practically bankrupt.” 
 
 Spain’s 8,000 municipal governments, which are also suffering from a revenue slump caused by the collapse of property prices, owe 33 billion euros in unpaid bills, according to the Platform Against Late Payment, a pressure group. 
 
 Borrowing Costs 
 
 Concerns about regional finances have helped swell Spain’s borrowing costs, as the gap between Spanish and German 10-year bond yields widened to 243 basis points on May 20, the highest in more than five months, from 218 a week earlier. 
 
 Newly elected officials may also seek to address some of the demands of the protests against spending cuts, corruption and an unemployment rate of 21 percent, the euro-region’s highest. Carme Chacon, cited in polls as a candidate to succeed Zapatero, said on May 18 that some of the demonstrators’ proposals were “reasonable.” 
 
 Young protesters pitched tents on May 15 in Madrid’s Puerta del Sol and have been there ever since, defying a ban on demonstrations the day before elections that Spanish police didn’t enforce. They are calling for changes to the electoral system to reduce the dominance of the two main parties and stop politicians facing corruption charges from running for office. 
 
 Make-Shift Camp 
 
 The protests, which have spread to other Spanish cities and have been supported by people of all ages, call for voters to be able to choose lawmakers directly rather than for party lists. The movement will continue demonstrating “at least” through May 29, it said today in a statement. 
 
 The emergence of the make-shift camp in Sol has been spurred by the use of Twitter, mirroring tactics employed in protests in Tunisia and Egypt. The camp, fueled by generators and a solar panel, is divided into areas that include a medical tent, a children’s area and a legal department, while a map of the zone shows three food stalls, stocked by donations. 
 
 “No work, no house, no future, no fear,” read one of the posters at the square, one of Madrid’s most famous landmarks. 
 
 The Socialist government has angered voters with the deepest budget cuts in three decades and measures to help banks, while 45 percent of young people are out of work. Turning its back on traditional allies in its efforts to stem contagion from the sovereign-debt crisis, the government has cut wages, axed benefits and overhauled labor and pension rules. 
 
 Spain, home to a third of the euro region’s unemployed, has committed 11 billion euros from the state’s bank bailout fund to lenders struggling from the collapse of the debt-fueled property boom. Savings banks need another 14 billion euros to meet new capital requirements, and lenders that can’t raise capital privately will tap the fund again. 
 
 To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net 
 
 To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
– Facing widespread protests amid 21.3% unemployment, Spain’s ruling Socialist party suffered a resounding defeat at the hands of conservatives yesterday—reportedly the party's worst-ever performance in local and regional elections. The conservative People's Party took 38% of the vote at the municipal level, compared with 28% for the Socialists, who lost control of Seville and Barcelona; they've controlled the latter since 1979, reports Bloomberg. “It is reasonable to expect that the Socialist party be punished today at the polls. We accept this and we understand it,” said PM Jose Luis Rodriguez Zapatero. But it doesn’t mean he’ll set an earlier date for general elections, he said; they’re due by next March, the AP reports.