Spain will go the polls on 28 April after Prime Minister Pedro Sanchez called a snap national election following defeat in a key budget vote.
“Between doing nothing and continuing without the budget and calling on Spaniards to have their say, I choose the second,” he said in a televised statement following a cabinet meeting.
“Spain needs to keep advancing, progressing with tolerance, respect, moderation and common sense.”
Mr Sanchez’s minority socialist government has been in office for just over eight months, thanks to Catalan support.
However, separatist MPs failed to back his budget after the government refused to negotiate over the region’s right to self-determination.
It will be the third general election in Spain in less than four years.
The move could spell months of uncertainty in the eurozone’s fourth-largest economy, where the political landscape has become increasingly fragmented.
Opinion polls show no single party would win enough votes to govern on its own with possible coalition scenarios suggesting lengthy negotiations between three or more parties – including the far-right Vox.
Sky’s Europe Correspondent Mark Stone said the election could impact on the UK if Brexit is delayed.
“The election falls a month after the UK is due to leave the EU on 29 March. But if the departure is delayed through an extension of Article 50, then an election in Spain could complicate things.
“It’s easy to imagine a scenario where political parties on the campaign trail use Gibraltar as one of their electioneering tools.
“The British Overseas Territory has been a problematic issue at various points in the Brexit negotiations with Mr Sanchez playing the Gibraltar card in an attempt to influence recent regional elections.
“Even if Article 50 isn’t extended and the UK leaves on time at the end of March, elections in any member state could complicate or slow down the ratification of a future trade deal the UK will need to sign with the EU. All EU member countries have to agree to the terms of a future UK/EU trade deal.”