Spain's King Juan Carlos talks to the media as he walks away followed by US Chamber of Commerce President and Chief Executive Officer Thomas Donohue at Zarzuela Palace outside Madrid, on June 2, 2014. [Photo/Agencies]

MADRID - Spain's King Juan Carlos said on Monday he would abdicate in favour of his son Prince Felipe, aiming to revive the scandal-hit monarchy at a time of economic hardship and growing discontent with the wider political

Felipe, a modern prince for 21st century Spain's Crown Prince Felipe de Borbon, a tall former Olympic yachtsman, will take the throne largely unscathed by scandals that have battered the royal family. Frequently smiling but more reserved than his father, the 1.98-meter Felipe, 46, had long suffered from comparisons with the easygoing Juan Carlos, who played a historic role in Spain's post-dictatorship transition. Felipe was schooled for his future role as monarch in the three branches of the armed forces and during studies abroad, and he comes across as a solid, studious personality. "His goal, his only goal, is to serve Spain. It has been deeply ingrained in him that he must be the country's main servant," his mother Queen Sofia once said. His mission is to guarantee the continuation of the monarchy, which was restored in 1975 after the death of General Francisco Franco. Once considered Europe's most eligible bachelor, Felipe wed former television presenter Letizia Ortiz in a glittering ceremony in Madrid's Almudena Cathedral in 2004 after several previous romantic dalliances, including one with a Norwegian lingerie model. Ortiz, a 41-year-old divorcee, was the first commoner to come in line for the Spanish throne.

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"A new generation is quite rightly demanding to take the lead role," Juan Carlos, 76, said 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.

The once-popular monarch, who helped to smooth Spain's transition to democracy in the 1970s after the Francisco Franco dictatorship, seemed increasingly out of touch in recent years.

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

A corruption scandal in the family and his visible infirmity 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 both under investigation and a judge is expected to decide soon whether to put Urdangarin on trial on charges of embezzling 6 million euros in public funds through his charity. He and Cristina deny wrongdoing.

Rajoy said the king, who walks with a cane after multiple hip operations and struggled to speak clearly during an important speech earlier this year, was stepping down for personal reasons.

But a source at the royal palace told Reuters that political factors had driven the decision. The source said the king had decided in January to step down, but delayed the announcement until after the European Union election on May 25.

Anti-monarchist sentiment

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

Spain is only just pulling out of a long recession that has dented faith in politicians and state institutions as well as the royal family. The PP and the Socialists, which have dominated politics since the return to democracy, are committed to the monarchy, but polled less than 50 percent between them.

The smaller leftist parties Podemos and United Left and the green party Equo, which together took 20 percent in the European vote, all called on Monday 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've started with the royals," said Jordi Rodriguez Virgili, professor of political communication at Navarra University.

Thousands demonstrated on Monday night across Spain's main cities to demand a plebiscite.

"I came here because I believe we should at least vote in a referendum. Three out of four Spaniards have not decided to have this (political) system, so I think it would be fair," said Hector Munoz, a 25-year-old student demonstrating in Madrid's Puerta del Sol square.