European reaction to the complete collapse of the Spanish empire in 1898 helped to reinforce already established stereotypes about the Spanish: they were a backward society, unenlightened, hopelessly stuck in their Catholic ways, and in decline long before 1898. This sentiment was particularly strong in Britain, where enduring legacies about the Black Legend were very strong, especially since Britain had long competed for colonial and imperial holdings with Spain. Britain often emphasized Spain's Catholicism as uniquely cruel, which they considered essential to Spain's treatment of Cubans.

The most important consequences that 1898 had on the European continent were seen in Spain itself. 1898, known as El Desastre in Spain, provoked a crisis of confidence in the Spanish regime and nation, a phenomenon which has puzzled many historians since Spain lost far more colonial holdings in the early nineteenth century than in 1898. The crisis of confidence in the state was so profound that it reached existential levels. A group of political and literary intellectuals known as the Regenerationists began publishing many books and articles that called into question the very meaning of Spanish identity. They were called the regenerationists because they called for a complete reconfiguration of Spanish political and social life. The regenerationists were varied in their political outlook but they all agreed that the current Restoration system needed to be scrapped, or at least heavily reformed. Spain's political system in the late 19th century was a complicated system of rotational power exchange, in which liberals and conservatives rotated every few years to maintain a balance of power. This balance of power was implemented via widespread electoral fraud, which was guaranteed by local political bosses known as caciques, who would carry out the government's bidding in exchange for local favors. Spain's constitution, at least on paper, was very progressive for its time, since it included the right to universal manhood suffrage. However, the politicians feared the masses given the political instability Spain endured throughout most of the nineteenth century. This attempt to alienate the population quickly eroded confidence in the Restoration system. The system was perceived by the regenerationists as hollow, out-of-touch, and thus responsible for the disastrous war with the United States.

Out of this outrage we se the beginnings of Spanish mass politics. The widespread disaffection with the state helped rally together the Spanish Socialist Party, who had been a minute presence in Spain since its foundation in 1879, but had now made headway in the labor movement. Republicans also began to make inroads among working class communities in Barcelona and Madrid. The Spanish right began to organize politically, forming the basis for social Catholicism and praetorian politics. In longer discussions about structural origins of the Spanish Civil War, the emergence of mass politics in Spain is often cited as one of the key processes that lead to a polarization of the Spanish masses: the disaffection of the population with the state required ordinary people to seek a new politics outside of state structures, often of a very radical kind, which helped to further divide the Spanish people into the metaphorical "two Spains". This polarization, it is argued, helped to crete the conditions for an eventual civil war.

I recommend you read Sebastian Balfour's "The End of the Spanish Empire" "https://global.oup.com/academic/product/the-end-of-the-spanish-empire-1898-1923-9780198205074?cc=us&lang=en&.

See also Enrique Sanabria's "Republicanism and Anticlerical Nationalism in Spain", which discusses the anticlerical symbolism of Radical Republican discourse in Spain, with outrage over 1898 functioning as a key component. Republicans often perceived the church's meddling in state affairs as having provoked the crisis in 1898.

Also consult Jose Alvarez Junco's "The Emergence of Mass Politics in Spain: Populist Demagoguery and Republican Culture, 1890–1910" http://www.amazon.com/Emergence-Mass-Politics-Spain-Demagoguery/dp/1902210972/ref=sr_1_1?ie=UTF8&qid=1454524598&sr=8-1&keywords=jose+alvarez+junco+alejandro+lerroux