The Spanish region of Catalonia, on October 1, held a referendum on independence, despite fierce opposition from the central government, which said the vote violated the Constitution. The vote was held even after being suspended by the Constitutional Court. The decision to go forward with a vote descended into chaos, with hundreds injured due to clashes with the police and now a mass conflict has appeared between the Spanish authorities and the Catalonians.
Catalonia’s withdrawal from Spain would impact the Spanish economy negatively let alone the European Union, but without Spanish funding – Catalonia will also struggle to thrive in the near future.
With plenty of struggle over the last decade for the Spanish economy, the Catalonian conflict is the last thing the Spanish government could have asked for. With the build-up of this illegal referendum stirring up for a number of years – hell has broken loose and the Catalonians have begun to make mass noise within the region which has led to chaos.
The Spanish economy will be majorly impacted if the independence was ever made official, and Catalonia was made an independent state. Catalonia occupies just over 6.3% of Spain’s territory with a population of just over 7.45 million. (Spain’s current total population size amounts to 46.56 million). Therefore the region accounts for 16% of Spain’s total population and its economic contribution is significant.
With a huge export market, Catalonia is responsible for over a quarter of Spain’s total exports, and a large level of foreign investment has taken place in the region.
Unemployment is generally a lot lower than the rest of Spain and there is less income inequality which was one of the initial causal factors of the divide. Catalonia’s regional unemployment levels stand at around 13.2% which contrasts favorably with the 17.2% for the country as a whole.
Catalans would also take a large hit if the independence was ever made official. 35.5% of Catalan exports are to the wider Spanish market, it is likely there would be a trade boycott due to the conflict. Catalonia would receive no central Spanish funding and its economy could shrink by some 25-30% and its unemployment rate may double if it were to become a separate state.
Catalonia accounts for 16.34% of overall Spanish debt – this along with a loss of Catalonian tax revenues would be a massive hit to the Spanish economy. It ultimately will come down to the negotiations to see if the Catalans will carry over this debt, or a percentage of Spain’s overall debt.
The conflict will also mean that Catalonia would not get an automatic seat in the EU being that it must receive an unanimous ‘yes’ from the rest of the European countries who make up the counsel. Being that Spain and its allies are unlikely to vote on this, Catalonia would have to cut off its ties with the EU despite its only currency being the euro.
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