Spain vote LIVE: Rajoy AXED as socialist Sanchez SEIZES power in latest EU CRISIS

The 63-year-old has been replaced by Socialist Party leader Pedro Sanchez whose no-confidence motion achieved the 176 vote majority it needed to be successful.

Mr Sanchez becomes Spain's seventh Prime Minister since its return to democracy in the late 1970s following the dictatorship of Francisco Franco.

But Rajoy's departure after six years in office casts one of the European Union's top four economies into an uncertain political landscape, just as another - Italy - pulled back from early elections.

Mr Sanchez eventually won the no-confidence motion with 180 votes in favour, 169 against and 1 abstention.

He has suggested he will try to govern until the scheduled end of the parliamentary term in mid-2020 but it is unclear how long his administration, with only 84 Socialist deputies in the 350-member legislative assembly, can last.

Mr Rajoy had conceded defeat prior to the no-confidence vote, earlier telling deputies: "Mr Sanchez will be the head of the government and let me be the first to congratulate him."

Rajoy's position had become increasingly untenable, undermined by his status as head of a corruption-tinged minority government as well as a divisive independence drive in the wealthy region of Catalonia.

The Basque Nationalist Party, whose five seats were key to Sanchez securing enough parliamentary backing, withdrew support from Mr Rajoy after dozens of people linked to his centre-right People's Party (PP) were sentenced to decades in jail in a corruption trial.

Two Catalan pro-independence parties as well as Podemos also backed Mr Sanchez. Market-friendly Ciudadanos, leading in the national opinion polls, was the only major party that supported Mr Rajoy.

The new leader is expected to be sworn in by Monday and appoint his cabinet next week. He has promised to start talks with the Catalans but has already said he will not give them an independence referendum.

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The parliamentary debate istarted at 8am (BST) with a vote took place at 10am.

Follow our live blog for updates below:

12.10pm update: European Commission backs Sanchez government

European Commission President Jean-Claude Juncker has declared his full confidence in the new Spanish government.

A Commission spokeswoman said: “Mr Juncker has sent Pedro Sanchez a congratulatory letter stating his confidence in the Spanish gove

 11.40am update: Pedro Sanchez meets the King of Spain

Spanish PM-in-waiting Pedro Sánchez has been granted and audience with King Felipe VI.

After announcing the result of the vote, President of Congress Ana Pastor informed the decision of the Lower House to the monarch who, after formally receiving the resignation of Mariano Rajoy, will invite the Socialist Party leader to form a government.

Once he has taken office before the King, the new PM must inform the composition of his cabinet so that the appointments are published and the ministers can take up their positions.

The appointment should be published tomorrow in the Official State Gazette and Mr Sánchez could be in office before then.

11.30am update: Market reaction to Madrid vote

The global financial markets have so far remained largely unmoved by the upheaval in Madrid and appear preoccupied with the situation in Rome.

Seema Shah, global investment strategist at Principal Global Investors, said: “Much of the market panic around Italy was about the threat to its membership of the Euro area but, by contrast, all of the main Spanish political parties are supportive of the single currency.

“Presuming Sanchez does not try to hang on to power, Spain is likely to see new elections later this year and a market-friendly, pro-European government should materialise from there.

“In the meantime, given that the support of Basque nationalist MPs required a promise to not change the budget, Sanchez is unlikely to make sweeping changes to the budget.

“Material economic progress has been made in recent years - Spain’s fiscal position has improved; unemployment has fallen; and the banking system has been strengthened - the latest political disruption does not upset the generally positive outlook for the Spanish economy.

“Of course, political uncertainty is never welcome, but it has been telling that Spanish bond yields have fallen again today. It seems that Italian politics are more important for Spanish markets than Spanish politics.”

11.04am update: Sanchez steps up

PP spokesman Rafael Hernando has criticised Mr Sanchez for being secretive about his plans for the future.

He said: "I hope we are all up to the responsibilities we have for the good of our country.

“Hidden agreements that he does not dare to disclose and that make him a president with many unknowns.

“Today you win and Spain loses.”

Mr Sanchez defended the no-confidence motion as "legitimate and constitutional”.

He said: "This is the parliamentary democracy that we have endowed as a result of the Constitution.”

He promised his government would fulfil European commitments, guarantee macroeconomic stability and the execute 2018 budget.

10.50am update: No-confidence motion approved

350 votes

Yes 180

No 169

Abstention 1

Pedro Sanchez will be the next President of Spain

10.35 update: Mr Rajoy loses the vote of no confidence.

Socialist party head Mr Sanchez becomes Spain's seventh Prime Minister since its return to democracy in the late 1970s following the dictatorship of Francisco Franco.

10.00am update: Mr Sanchez has also addressed the chamber.

He said: “The first thing that PP has to do is to renew its leadership, regenerate itself to represent that conservative Spain that wants to see honest leaders in front of the party.

“Today a new time in Spanish politics is beginning. I offer my hand to everyone and I hope we are all up to the responsibilities that lie ahead for the good of our country.

“Democracy wins today.”

9.40am update: Mr Rajoy has made a statement to the Spanish parliament.

He told MPs: “It seems that the no confidence motion will go forward. I want to congratulate Mr. Sanchez and I will accept the result of the voting.

“It has been an honour leaving Spain better than I found it. Thank you all. Thanks to the Spaniards for their understanding and support.”

9.20am update: The parliamentary debate surrounding the no-confidence motion has just resumed with the vote expected at around midday.

Mr Sanchez is expected to be sworn at the weekend and his cabinet appointed next week but with only 84 seats in the 350-seat parliament, his government will struggle to pass legislation.

A general election is due by mid-2020 and Mr Sanchez could call a snap vote before that although he is likely to wait until European, local and regional elections which will take place in May next year.

9.00am update:

Some sections of the Spanish media are questioning whether a new leader is the answer to Spain’s political turmoil.

An editorial in the influential El Pais newspaper said: “The no-confidence vote will remove Mariano Rajoy as Prime Minister but won’t produce greater political stability.