By Olivia Crellin, Jeannette Neumann, Christopher Bjork and Bjork 

MADRID--As news of King Juan Carlos' abdication spread across Spain, so did calls for a debate on the future of the monarchy, which polls show has lost support after a series of scandals in recent years.

Two small leftist political coalitions that did well in last week's European Parliament election said the once-revered House of Bourbon is outmoded. They joined other leftist groups in calling for rallies in several cities Monday evening in support of a referendum on whether the monarch should remain head of state. Spain's two dominant parties--the conservative Popular Party and the Socialists--rallied behind the Royal House.

"If Felipe of Bourbon wants to be head of state, he should stand for election" said Pablo Iglesias, the head of Podemos, a political upstart that garnered more than a million votes in the May 25 election. "Spaniards need to have the capacity to decide their future," he said in an interview with Spanish television station Cuatro.

María Dolores de Cospedal, the secretary-general of the governing Popular Party, pledged the party's allegiance to the crown and to the future King Felipe and said her party would assure a smooth transition. Emilio Botín, who leads Spain's largest bank Banco Santander SA, was among many business leaders who came out in support of the royals, speaking to Spanish news agency EFE about the "extraordinary legacy" left by Juan Carlos and Felipe's "capacity and dedication to Spain, which we know and admire."

While King Juan Carlos is perceived as a key figure in Spain's transition from dictatorship to democracy and has kept up support among Spaniards who lived through that period, many young Spaniards say they don't identify with the monarchy.

The king's popularity fell after his younger daughter, Princess Cristina, and her husband became targets of a judicial investigation into tax fraud and misuse of public funds. Both deny any wrongdoing, and neither has been charged in the continuing probe.

By abdicating, the king is "scoring a lot of points" with Spanish youth who have been hit hard by six years of economic downturn and high unemployment and feel the country's political institutions no longer respond to their needs, said Luis Rodríguez Avello, a 33-year-old environmental engineering consultant in Madrid.

Juan Carlos's 2012 luxury elephant-hunting trip in Botswana, which came to light only after the king broke his hip there, hardened that perception, Mr. Avello said.

The king apologized but many Spaniards didn't forget. Barbara Prummer, a 20-year-old fine arts student from Madrid, said the royals "do not represent the best of Spain, with all the corruption and hunting elephants. They think they can do what they like, that they are superior to us."

Some think Crown Prince Felipe, 46 years old, is different. The prince projects an "image of a modern monarchy" because of his youth and because he married for love, said Rafael Madridejos, 41, who works in the textile business in Madrid. Felipe will rejuvenate the image of the Spanish monarchy because he hasn't been tainted by scandals, he said. "He has completely distanced himself."

Alejandro Arjona, 33, an attendant on Spain's high-speed rail network known as AVE, said the king is leaving a positive legacy for his son to follow. "There's no Spanish president who has the charisma that the king and the prince have as an image of Spain," Mr. Arjona said.

Many students rushing through the Complutense University campus in Madrid on their way to exams mirrored the more positive opinion about Felipe, even if many thought the monarchy was now irrelevant in Spain.

"He will bring a new face to Spain, a younger model with renewed energy, " said Irene Isidro de la Nava, a 20-year old law student. "He's already recognized for his work and how he has helped his father with royal business."

In recent polling by Spain's sociological institute CIS, Prince Felipe got higher approval ratings than his father did.

But for Miguel Domenech, 30, the idea of a modern monarchy is an oxymoron, regardless of who leads it. The Spanish monarchy "is an obsolete institution," said Mr. Domenech, unlocking his bicycle outside of a Madrid employment office. Felipe is "more of the same."

Mr. Domenech said his parents and other Spaniards over 50 appreciate the king as someone who in the late 1970s "really helped the country become a democratic state." On the other hand, he said, younger Spaniards, who don't remember General Francisco Franco's dictatorship, "would prefer there were no king."

Fermín Carvajal, 30, who owns a hamburger restaurant in Toledo, an hour from Madrid, agrees.

Felipe should step down because the Spanish monarchy is antiquated, Mr. Carvajal said; if he doesn't, he should focus attention on the country's 26% unemployment rate, one of the highest in Europe, and work with Spanish companies to step up hiring.

Ilan Brat contributed to this article.

Write to Jeannette Neumann at jeannette.neumann@wsj.com and Christopher Bjork at christopher.bjork@wsj.com

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