Spain's King Juan Carlos, who led Spain's transition from dictatorship to democracy but faced damaging scandals amid the nation's financial meltdown, announced Monday he will abdicate in favour of his son so that fresh royal blood can rally the nation in its time of trouble.

The king told Spaniards in a nationwide address that he started making a plan to give up the throne after he turned 76 in January.

He said that the 46-year-old Crown Prince Felipe — whose 70 per cent approval rating in a recent El Mundo newspaper poll compares to his father's 41 per cent — is ready to be king and will "open a new era of hope."

Juan Carlos didn't specify which problems his son must address as the next head of state for Spain. But the king stressed Felipe will need to "tackle with determination the transformations that the current situation demands and confront the challenges of tomorrow with renewed intensity and dedication."

Two other European monarchs abdicated last year:

  • Dutch Queen Beatrix, after 33 years as head of state.
  • Belgium's Albert II, after his 20-year reign as king. 

By contrast, British monarch Queen Elizabeth turned 88 in April with no sign of stepping aside.

As Spain embarks on what appears to be a sluggish but steady economic recovery, its biggest problem is the drive by the wealthy northeastern region of Catalonia to hold a secession vote in November — one labelled illegal by the central government in Madrid.

1st-born daughter will likely succeed Felipe

Now that Felipe is set to become king, Spain is expected to change its constitution to make sure his first-born daughter Leonor can succeed him.

The royal family has said it wants the change to ensure she is next in line to the throne in the event that Felipe's wife gets pregnant again and gives birth to a boy, who would become monarch under the current constitution.

Analysts say that could open the door to political negotiations for additional proposed constitutional changes, including demands by the leading opposition Socialist Party to grant Catalonia more autonomy or special financial benefits to ease Catalonian separatist feelings.

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Spain's Crown Prince Felipe will take over from his father. (Ivan Alvarado/Reuters)

"I think both parties could agree on a change to accommodate the needs of Catalonia," said Antonio Barroso, a London-based analyst with the Teneo Intelligence political and business risk consulting firm. He cautioned that the process could take months.

Artur Mas, the president of Catalonia, declared that the king's abdication would not derail his plans to hold the vote asking Catalans whether they want to secede from Spain.

"We have a date with our future on Nov. 9," Mas told reporters after the king gave his speech.

The abdication was first announced Monday by Prime Minister Mariano Rajoy, who did not say when the handover would happen because the government must now craft a law creating a legal mechanism for the abdication and for Felipe's assumption of power.

Rajoy, however, said he would preside over an emergency cabinet meeting on Tuesday to draft the law which is assured of passing because his centre-right Popular Party has an absolute majority in Parliament.

Far-left parties called for a national referendum to abolish Spain's monarchy after the king made his announcement and said they would hold nationwide protests Monday night. They surprised the nation May 25 by polling much stronger than expected in the European Parliament elections, taking away seats from the mainline Popular and Socialist parties.

On throne for 39 years

Juan Carlos has been on the throne for 39 years and was a hero to many for shepherding Spain's democratic and economic transformation, but has had repeated health problems in recent years.

His longstanding popularity took a big blow following royal scandals, including a 2012 elephant-shooting trip he took in the middle of Spain's financial crisis during which he broke his right hip and had to be flown from Botswana to Spain aboard a private jet for medical treatment.

The king's image was also tarnished by the investigation of his son-in-law, who is suspected of embezzling large amounts in public contracts.

His daughter Princess Cristina in January was forced to testify in the fraud and money-laundering case targeting her husband Inaki Urdangarin, an Olympic handball medallist turned businessman. She became the first Spanish royal to be questioned in court since Juan Carlos took the throne.

In his speech the king did not mention any of the scandals, played down his health issues and praised the crown prince.

"My son Felipe, the heir to the throne, embodies stability," Juan Carlos said.

Felipe would presumably take the title King Felipe VI. He has a law degree from Madrid's Autonomous University and obtained a master's in international relations from Georgetown University in the United States.

He also has a Canadian connection, attending Ontario's Lakefield College School during the 1984-85 school year.

Felipe is married to Princess Letizia, a former television journalist. Their daughters are ages eight and seven.

Like his father, Felipe has travelled the globe trying to maintain Spain's influence especially in former Latin American colonies, while seeking to promote the nation's international business interests.

With files from CBC News