On 26 October, President of Catalonia Carles Puigdemont put the decision of independence in the hands of the region's parliament. The move almost guarantees that the Spansh Senate decides on 27 October to approve measures that will allow Spain to take complete control over the semi-autonomous region's government, as Spanish Prime Minister Mariano Rajoy's conservative party hold a majority. How this all affects the economy of both the region and the country as a whole is uncertain, however, cracks have begun to show over the last few months as the Spain-Catalonia situation has escalated.
It has been a tense few months in the lead up to and in the aftermath of Catalonia’s independence referendum that was held on 1 October. Both pro-independence separatist groups and pro-unity groups have taken to the streets of Barcelona on occasion to peacefully protest while both the Catalan and Spanish governments have volleyed shots back and forth at one another. Although the referendum was illegal according to the Spanish constitution, Catalonia went ahead with the vote nonetheless. With no legal guarantees and many Catalans against the vote staying away, 90% voted ‘yes’ albeit with only a 40% voter turnout. A week later, in a rather confusing speech before Catalan parliament, President Puigdemont declared that they had “brought democracy back to Europe” and claimed that the semi-autonomous region had won its right to independence, stopping short of an all-out declaration. Spanish authorities demanded that he clarify his position after the speech, however, with no answer coming from the Catalan president, the Spanish government triggered Article 155 for the first time since the constitution was ratified in 1978. Still conditional on approval from the Senate, the unprecedented move will enable the central government to seize powers from the Catalan administration and bring the semi-autonomous region under Madrid’s direct control. In response, on 26 October Puigdemont was expected to call a snap regional election set for 20 December. However, he unexpectedly decided not to call for elections and instead lobbed the decision over the fence to the Catalan parliament stating that the Spanish government’s actions would not allow him to call for elections now. Despite the turbulent political scene in Spain, financial markets have been fairly calm. Nonetheless, many large corporations based in Barcelona, the region’s capital, have either already moved headquarters or have stated they will do so if the situation escalates further as many citizens move their money to banks outside the region. Tourism is also likely to be hurt, one of the region’s most important revenue streams. Now it’s a waiting game to find out how the Spanish government responds on 27 October, however, it is expected that the Spanish Senate will approve Article 155 to seize power from Catalonia. Some have also speculated that the Catalan parliament may also move to vote on a declaration of independence on the same day. While we wait to see how it plays out, we asked 7 economic experts from the likes of Oxford Economics, Capital Economics, BMI Research and more for their views on how the situation could unfold and affect the economies of the region and the country as a whole. More at FocusEconomics.