KING Juan Carlos of Spain has finally bowed to pressure and announced his abdication from the Spanish throne after losing public support following a series of scandals and gaffes.

The 76-year-old king stunned his country and the world when he announced he would abdicate in favour of his son Prince Felipe in an attempt to revive the scandal-hit monarchy at a time of economic hardship and growing discontent with the wider political elite.

"A new generation is quite rightly demanding to take the lead role," said Juan Carlos on tele­vision, hours after a surprise announcement from Prime Minister Mariano Rajoy that the monarch would step down after almost 40 years on the throne.

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The once popular Juan Carlos, who became king in November 1975 and who helped smooth Spain's transition to democracy in the 1970s after the dictatorship of General Franco, seemed increasingly out of touch in recent years.

Carlos took a secret luxury elephant-hunting trip to Botswana in 2012, a time when one in four Spanish workers was unemployed and the government teetered on the brink of default.

A corruption scandal in the family and his visible infirmity after repeated surgery in recent years have also eroded public support. Polls show greater support for the low-key Felipe, 46, who has not been tarnished by the corruption allegations.

The king's younger daughter, Princess Cristina, and her husband, Inaki Urdangarin, are under investigation and a judge is expected to decide soon whether to put Mr Urdangarin on trial on charges of embezzling £4 million in public funds through his charity. The couple deny wrongdoing.

The king, who walks with a cane after multiple hip operations and struggled to speak clearly during an important speech earlier this year, is understood to have decided in January to step down, but delayed the announcement until after the European Union election on May 25.

Political analysts said the ruling conservative People's Party (PP) was eager to put the more popular Prince Felipe on the throne to try to combat increasingly anti-monarchist sentiment, after small leftist and anti-establishment parties did surprisingly well in the election.

The country is just pulling out of a long recession that dented faith in politicians, the royal family and other institutions. The PP and the Socialists, which have dominated politics since the return to democracy, are committed to the monarchy, but they polled less than 50 per cent between them in the recent election.

Smaller leftist parties Podemos, United Left and Equo green party, which together took 20 per cent in the European vote, all called yesterday for a referendum on the monarchy.

"People are calling for political regeneration, a change in the institutional functioning of the state after around 40 years of democracy, and they have started with the royals," said Jordi Rodriguez Virgili, professor of political communication at Navarra University.

Spain does not have a precise law regulating abdication and succession. Mr Rajoy's cabinet is scheduled to have an extra­ordinary meeting today to set out the steps for Felipe to take over as Felipe VI.

The transition will likely be accomplished by passing a law through parliament, where the PP has an absolute majority.

"We have been hearing continuously over the last few months on the necessity for deep change. The feeling is the European elections have been a turning point and I believe the decision has been made in this context," said Rafael Rubio, constitutional expert at Madrid's Complutense University.

There had been media speculation over an abdication since last year. Two-thirds of Spaniards were in favour of the king stepping down, according to a January poll by Sigma Dos. That compared with 45 per cent a year earlier. Only 41 per cent of those polled had a good or very good opinion of the king.

But Felipe has a positive rating of 66 per cent and most Spaniards believe the monarchy could recover its prestige if he took the throne, according to the poll. Political analysts speculated the prince may try to seek dialogue between Mr Rajoy and Catalan President Artur Mas, who is leading a movement to break away from Spain.

But Mr Mas said yesterday that Felipe's taking the throne would not dissuade him from trying to hold a referendum on independence in November.

The prince, who has had a growing role in ceremonial events in the past year, is seen as more practical and in tune with current affairs than Juan Carlos, a jovial skier and sailor once beloved for his common touch and seen as much more accessible than the older generations of British royals.

Juan Carlos will be the second European monarch to abdicate in just over a year. Queen Beatrix of the Netherlands stepped down in April 2013 to make way for her son Willem-Alexander.

Felipe married divorced journalist Leticia Ortiz in 2004 and they have two daughters. The royal family began a Twitter feed on their tenth wedding anniversary, May 21.

The prince is scheduled to appear today with the king at the El Escorial monastery and former royal palace.