SPAIN has a new prime minister after embattled Mariano Rajoy was defeated in a no-confidence motion – the first time a serving leader of the parliament has been removed in Madrid in four decades of democracy.

The new prime minister is Socialist leader Pedro Sanchez after members of the Congress of Deputies approved the motion of censure - with 180 votes in favour, 169 against and 1 abstention.

In brief farewell remarks to MPs before the vote, Rajoy said: “It has been an honour to leave Spain better than I found it. Thank you to all Spaniards and good luck.”

This was in marked contrast to the dogged determination he has exhibited over Catalan independence, implementing direct rule on the north-eastern state and the corruption scandal that has rocked his conservative People’s Party (PP).

Last week, Spain's highest court jailed business chiefs and former PP members, including its treasurer, and fined the party for benefiting from kickbacks in a cash-for-contracts scandal.

Sanchez, 46, is seen as a federalist who want Catalonia to remain part of Spain, but in remarks to the Basque Nationalist Party (PNB) yesterday in the Congress of Deputies, he said he was willing to open dialogue with Catalonia.

He also said he would keep in place Rajoy’s budget measures, which the PNB had helped pass through parliament, and which will be of considerable benefit to the Basque Country.