Acting PM Pedro Sanchez's centre-left.........>

SPAIN: Acting PM Pedro Sanchez's centre-left Socialist Party (PSOE) is inching

closer towards forming a gov't with the far-left Unidos Podemos (UP). 

- Left-wing Catalan ERC seen to abstain on investiture vote. 

- 1st vote (potentially between 2-5 Jan) requires majority in Congress of

Deputies (176 of 350 seats), and is unlikely to pass.

- In 2nd investiture vote a simple majority is required. PSOE+UP+ minor left

parties=166 seats. With 163 deputies likely to vote against, abstention of ERC

could prove crucial.

- PSOE-UP gov't would present more overt leftist policy agenda, with big

increases to minimum wage, increased taxes on high earners and corporations,

reversal of 2012 labour reforms of former PM Mariano Rajoy, and goal of 7% of

GDP spending on healthcare sector.

- To gain ERC's abstention, Sanchez has given into their demands of 3

negotiators from each side at meetings between national and regional gov'ts, and

meetings to be held in Barcelona. State attorney has also recommended release of

ERC leader Oriol Junqueras from prison as gesture of goodwill.