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MADRID (Reuters) - Catalan far-left party CUP said on Sunday it would not support acting regional head Artur Mas in his bid for another term, forcing new local elections and increasing the likelihood all Spaniards may have to return to the ballot box this year.
The drawn-out process of forming a government in Catalonia echoes the political stalemate gripping Spain at a national level following an inconclusive general election two weeks ago.
The prospect of new elections in Catalonia, most likely in March, increases the likelihood of a second general election this year as the receding threat of a strong Catalan government seeking a split from Spain will reduce pressure on Prime Minister Mariano Rajoy's centre-right People's Party (PP) and the opposition Socialists to form a grand coalition to stand up to a separatist Catalan administration.
At the same time, pro-independence Catalan parties with seats in Spain's parliament will now be less likely to support a coalition government that does not allow a referendum as they begin campaigning for another round of regional elections on a separatist platform.
CUP, a fringe anti-capitalist party which rejects Catalan membership of NATO and the European Union, has held the key to the formation of the regional government since September elections awarded a majority to pro-independence parties, but it has repeatedly rejected the candidature of Mas, who heads a centre-right, business-friendly party.
The future of Catalonia is at the centre of talks between national parties on whether to form a grand coalition after Spaniards, disillusioned by recession and high-level corruption cases, turned away from establishment political forces and voted for new parties in last month's general election, leaving no party with a majority.
Whether to allow Catalonia a referendum on independence is a major sticking point preventing a left-wing alliance between newcomer Podemos, which supports a vote, and the Socialists, who don't.
However, the messy and protracted process to choose a Catalan leader in the aftermath of the September election, hailed at the time as a victory for separatists, has cast a pall over the independence movement and highlighted its divisions.
Separatist fervour has dulled since 2012 when at the height of Spain's recession around one million people turned out onto the streets of Barcelona clamouring for independence.
A tentative economic recovery has started to chip away at one of the highest unemployment rates amongst developed nations and Catalan businessmen have warned that political uncertainty in the region could put off investors.
Meanwhile, high-level corruption cases have also touched the independence movement with former regional president and prominent Catalan nationalist Jordi Pujol charged with money laundering on Wednesday as part of a long-running investigation into his hidden bank accounts.
Reporting By Sonya Dowsett; Editing by Susan Fenton