Spain’s elections over the weekend revealed a new majority government and a new prime minister for the country.  But, contrary to what the public has felt, the newly elected administration won’t change the landscape for the European region and its currency.

Prime Minister Mariano Rajoy has vowed change in Spain – which is why the Popular Party won the electoral majority, claiming 186 seats out of the 350 seat Parliament.  But, Rajoy and his party have their work cut out for them.  Economically speaking, Spain is in the dumps.  This is particularly true when considering major economic figures that have been pessimistically indicative for a while now.

Unemployment remains the highest in the region, topping out above 19% for almost the last two years.  This doesn’t include a record rate among young adults and teens that have found it extremely hard to make any disposable income in the current environment – contributing to household and consumer spending falling off a cliff.  According to recent data, the retail sales drop off is approximately 6% year over year.

The lackluster domestic environment has led to a stalled economy – one that made absolutely no expansion in the third quarter, according to the National Statistics Institute.  This is negative when compared to a 0.2% pace of growth reported in the second three months of the year.

So, given the economic environment, it’s difficult to see how Rajoy’s government will be able to make rising debt costs and make aggressive deficit reduction targets, as promised.  Benchmark bond yields have soared since the beginning of the month on Italian debt fears, exacerbating already existing problems in the Spanish nation.  At last check, Spanish 10-year bond yields rose another couple of basis points to trade at 6.56%, higher than the 6.38% seen at Friday’s close. Or, about a record 465 basis points above comparable German bund.  Spain’s yield is also about 3 times that of US benchmark debt.

It’s a wild comparison.  But, it shows how far Spain’s debt reduction measures and revenue garnering plans must be in order to field such high debt costs.  This is especially important if the administration wants to boost the country’s employment rate and reduce financing gaps to 6%, from their current 9.2%.

Unfortunately, the strain placed on the economy will keep the Euro under pressure against the US dollar for the time being until it becomes more evident that Prime Minister Rajoy is up to the current task.  That will take some time – that Spain does not have – and confidence from the markets.  Until then, his election win may not seem to be the cure-all that most people wanted – further fueling the global reserve currency.