By Paul Day and Belén Carreño
MADRID (Reuters) - Spain's conservative party, cast into opposition in June after six years in government, will map out its political direction for the foreseeable future on Saturday when it picks either a centrist or a right-winger as its new leader.
Riddled by a corruption scandal and carrying the messy legacy of a sovereignty crisis in Catalonia, the People Party (PP) is seeking to re-establish its identity after its previous leader Mariano Rajoy was ousted in a no-confidence vote.
That defeat brought the Socialists into office, and one of the first decisions the new PP leader will face is whether to give parliamentary support to Prime Minister Pedro Sanchez - who, like Rajoy before him, heads a minority government.
In a vote that could lay bare divisions within the party, PP lawmakers and other senior members will choose between previous deputy prime minister Soraya Saenz de Santamaria, 47, and Pablo Casado, a 37-year-old lawmaker from Avila northwest of Madrid.
Both are considered fiscally conservative but Saenz de Santamaria, the public face of the PP during much of Rajoy's term of office, is considered socially moderate while Casado, who opposes abortion, sits further to the right.
"They are debating the future of Spain," PP member and vote organiser Luis de Grande said on Friday.
He played down speculation that the race had bitterly split the party, fuelled by a decision by the PP to drop plans for a debate between the candidates because it would create an image of division.
"The (race) hasn't been all roses, but it's not Game of Thrones either," de Grande said.
In comments to reporters before a two-day party meeting begins, Saenz de Santamaria added: "We are electing not just the president of our party but also the future candidate for Spanish prime minister."
BUDGET AND PENSIONS
Sanchez called the no-confidence vote after dozens of high ranking PP officials were charged in a long-running corruption scandal, and following Rajoy's perceived failure to quell an illegal independence drive in the northeastern region of Catalonia.
Rajoy's successor will also set the party's stance on a legislative programme headed by the budget and pensions reforms.
Expected to be submitted to parliament shortly, the Socialists' 2019 budget proposals aim to raise the public spending ceiling, easing the fiscal purse-strings after years of deficit-cutting that won Rajoy credit for a sharp turnaround in Spain's economy.
On Friday, the Socialists proposed raising the 2019 spending limit by 4.4 percent to 125.1 billion euros (£111.7 billion) while ratifying an increase in deficit targets.
Saenz de Santamaria or Casado will also have to soon decide on whether they back a proposed reform of pensions to increase monthly payments in line with inflation.
The PP currently holds the most seats in the 350-seat parliament, with 134, while the Socialists hold just 84 seats and had to raise a parliamentary majority for the no confidence motion via pacts with smaller parties.
However, the conservatives could face tough times ahead as they will have to fight off the rise of liberal relative newcomer Ciudadanos as well as of far-right group Vox in municipal, regional and European elections next year.
For one lawmaker, whoever wins the vote will have their work cut out to match their predecessor's achievements.
"Today ...we say goodbye to the best president this party and our country has had, Mariano Rajoy," said senior party member Fernando Martinez Maillo.
"We start a new stage but the legacy of Rajoy will leave its mark"
(Editing by Julien Toyer and John Stonestreet)