A general election was held in Spain on 3 March 1996 to elect the members of the 6th under the Spanish Constitution of 1978. All 350 seats in the Congress of Deputies were up for election, as well as 208 of 257 seats in the Senate. It was held concurrently with a regional election in Andalusia and fifteen months ahead of schedule, after a legislative term of just two-and-a-half years.

Ever since forming a minority government after its victory in the 1993 election, the Spanish Socialist Workers' Party (PSOE) had to deal with the impact of the early 1990s recession in the Spanish economy, amid soaring unemployment, an increase in public deficit and GDP contraction. Internal divisions flourished at the 1994 PSOE congress between supporters of Prime Minister Felipe González and those of deputy leader Alfonso Guerra. González's cabinet was also rocked by the unveiling of a string of scandals, including accusations of misusing the "reserved funds" (the government's black budget for special operations) to pay for undeclared bonuses to high-ranking officials (the Roldán affair) and fund a "dirty war" against the ETA group through the GAL death squads; ongoing investigations into the Filesa and Ibercorp affairs; alleged tax evasion by former and current cabinet members; and illegal espionage by the CESID, the Spanish intelligence agency. Amid mounting political pressure, a snap election was triggered after Convergence and Union (CiU) withdrew its confidence and supply support from the government in mid 1995 and helped vote down the 1996 General State Budget in October that year.

The election resulted in the first PSOE defeat in a general election since 1979, but opinion poll predictions of a landslide victory by the opposition José María Aznar's People's Party (PP)—which had achieved resounding wins in the 1994 European Parliament election and the 1995 local and regional elections—failed to materialize. The PP, which aimed to secure enough support to govern alone (Aznar's coined "sufficient majority"), saw the election turn into the closest result between the two major parties in the Spanish democratic period to date; a PSOE comeback, fueled by a strong 77.4% voter turnout (the highest scored ever since) left the PP leading by just 1.2 percentage points and 290,000 votes, falling 20 seats short of an outright overall majority. Julio Anguita's United Left—which had hoped to come close or even surpass the PSOE, in the so-called sorpasso—also failed to meet expectations, despite scoring over 10% in their best overall result in a general election since the Communist Party of Spain's one in 1979.

At 156 seats, this would be the worst performance for a winning party in the democratic period until the 2015 election. The results forced Aznar to seek support for his investiture from peripheral nationalists, which he had ferociously attacked in the previous years over their alliance with González's government. After two months of negotiations, agreements were reached with CiU, the Basque Nationalist Party and Canarian Coalition (in what would become known as the Majestic Pacts), enabling Aznar to become prime minister at the helm of a centre-right minority cabinet, and signalling the end of over 13 years of Socialist government in Spain.

Background

Following the victory of the ruling Spanish Socialist Workers' Party (PSOE) at the 1993 general election, Felipe González was able to be re-elected as prime minister of Spain for a fourth term in office through a confidence and supply alliance with the Catalan nationalist Convergence and Union (CiU) and the support of the Basque Nationalist Party, both of which rejected the possibility of joining a coalition cabinet despite earlier speculation. The animosity between González's PSOE and Julio Anguita's United Left (IU) made any agreement between the two parties unfeasible, despite their combined parliamentary majority.

The 1992–1993 economic crisis continued, with González's fourth government having to face the impact of unemployment growth, a large public deficit and recession. The cabinet enforced a labour reform legalizing temporary work agencies, introducing "junk contracts", easening employers' ability to modify working conditions, reducing overtime and severance pays and making regulations on hiring and collective bargaining more flexible; this was met with a general strike in January 1994. Economic recovery started that year with a slow decrease of unemployment rates and a GDP growth of 2%, but the deficit in the social security system led to the Toledo Pact: a multi-party agreement to transfer all health care system and social assistance benefit financial obligations to the General State Budget (being henceforth funded through general taxes), while social security contributions were maintained to fund pensions. Another agreement also saw the approval of the first fully-democratic Criminal Code.

The Basque ETA group maintained its activity, which saw the 1993 Madrid bombings, the January 1995 killing of Gregorio Ordóñez (a PP local councillor in San Sebastián), attempted assassination plots on the opposition leader, José María Aznar (in April 1995), and on King Juan Carlos I (in the summer of 1995), the 1995 Vallecas bombing, and the kidnapping of prison officer José Antonio Ortega Lara in January 1996. The internal conflict within the PSOE between González's "renovators" () and Alfonso Guerra's supporters (guerristas) led to the former's victory at the 1994 party congress, while disagreements with González led to the resignation from the government of judge Baltasar Garzón, a star candidate in the 1993 election. Internationally, Spain held the presidency of the Council of the European Union in 1995 and was part of the NATO intervention in the Bosnian War (particularly the May 1995 Pale air strikes), which helped the selection of the Spanish foreign minister, Javier Solana, as new NATO secretary general in December 1995.

This period saw the uncovering of numerous corruption scandals affecting the ruling PSOE. The Roldán affair kicked off in November 1993 with reports of a large increase in Luis Roldán's wealth during his time as Civil Guard's director; this was later traced to illicit bonus payments from the Interior ministry's "reserved funds" (the government's black budget intended to finance operations against terrorism and drug trafficking) and the collection of kickbacks from the awarding of public contracts by Gabriel Urralburu while serving as Navarrese president. In April 1994, Roldán fled the country to escape prosecution—causing the resignation of the interior minister, Antoni Asunción—and later admitted to the wrongdoing. He was captured on 27 February 1995 in Laos amid unconfirmed claims of a deal with the government. Concurrently, Mariano Rubio was revealed to own undeclared bank accounts in the Ibercorp investment bank and to have used insider trading as Bank of Spain governor to amass his wealth; this prompted the resignations as PSOE's parliamentary spokesperson of Carlos Solchaga (former economy minister and a Rubio supporter in the early stages of the Ibercorp affair) and of Vicente Albero as agriculture minister (after it transpired that he owned an undeclared bank account related to the scandal).

In December 1994, two policemen convicted in 1991 for the Marey affair—the use of death squads, the Liberation Antiterrorist Groups (GAL), in a "dirty war" against ETA—admitted the involvement of a number of former National Police and Interior ministry officers (including former minister José Barrionuevo and security directors Julián Sancristóbal and Rafael Vera) and the financing of the GAL through the reserved funds, leading the Spanish National Court to re-open investigations on the affair in February 1995. Some defendants accused Felipe González of "knowing and allowing [the GAL's] activities", even hinting at his responsibility in establishing and financing the squads (the "Mr. X" person attributed leadership over the GAL network). The new investigations also involved the GAL in the killing of Lasa and Zabala one decade earlier. Barrionuevo, Vera and Sancristóbal would be convicted for the scandal, but the Spanish Supreme Court concluded in 1996 that there was no proof of González's involvement.

Other scandals would see Banesto chairman Mario Conde prosecuted for various crimes: fraud and misappropriation over the Banesto affair in late 1993 (the entity's failure and subsequent intervention by the government) and forgery over the Argentia Trust affair in 1994; the BOE affair (alleged embezzlement of public funds through the purchase of overpriced newsprint for the Official State Gazette, BOE); the Salanueva affair (involving former BOE director Carmen Salanueva fraudulently purchasing paintings at low prices invoking the names of Queen Sofía and González's spouse, Carmen Romero); and the ongoing judicial probe on the Filesa affair (the alleged illegal funding of PSOE campaigns). In June 1995, it was revealed that the Superior Centre of Defense Information (CESID)—the main Spanish intelligence agency at the time—had been recording and keeping the taped telephone conversations of dozens of prominent public figures for years, including politicians, businessmen, journalists and the King himself, apparently without the cabinet's knowledge. This illegal espionage scandal led to the resignations of the defence minister, Julián García Vargas (under whose authority the CESID was responsible to), and deputy prime minister Narcís Serra (Vargas's predecessor in the office).

The mounting scandals and the impact of the economic crisis prompted a harsh opposition campaign by the People's Party (PP)—which had its greatest expression in Aznar's coined phrase of "Go away, Mr. González" () in every parliamentary intervention—but also by the left-wing IU, which frequently coincided with the PP in opposition to weaken the PSOE government (particularly following the 1994 Andalusian election). Throughout 1995, both parties considered supporting a no-confidence motion on González, but talks failed due to it requiring CiU's support to succeed. While González responded by accusing both parties of staging a "pincer movement" on the PSOE, his government's accumulated erosion took its toll: González's party suffered its first-ever nationwide defeat to the PP in the 1994 European Parliament election, and the 1995 local and regional elections brought about the loss of many Socialist governments throughout Spain and a decline in Catalonia for PSOE's parliamentary partner, CiU, which withdrew its confidence and supply support. This was materialized in the 1996 General State Budget being voted down by the Congress of Deputies on 25 October 1995, prompting González to call a snap election for March 1996, fifteen months ahead of schedule.

Overview Under the 1978 Constitution, the Spanish were conceived as an imperfect bicameral system.. summarizing . The Congress of Deputies held greater legislative power than the Senate, having the ability to grant or withdraw confidence from a prime minister and to override Senate vetoes by an absolute majority.. Nonetheless, the Senate retained a limited number of specific functions—such as ratifying international treaties, authorizing cooperation agreements between autonomous communities, enforcing direct rule, regulating interterritorial compensation funds, and taking part in constitutional amendments and in the appointment of members to the Constitutional Court and the General Council of the Judiciary—which were not subject to override by Congress..

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