Economic cost of the Catalonia crisis

In news

  • Spain notched up vigorous growth in the third quarter, prior to the current Catalan crisis
  • Spain’s gross domestic product (GDP) expanded by 0.8 percent in the period from July to September, the national statistics institute INE calculated in a preliminary estimate.
  • That carries on from strong growth of 0.9 percent in the second quarter and 0.8 percent in the first quarter, as the Spanish economy enjoys robust consumer demand, a tourism boom and buoyant export demand.

What is Catalonia?

Catalonia is an autonomous region in north-east Spain with a distinct history dating back almost 1,000 years.

The wealthy region has about 7.5 million people, with their own language, parliament, flag and anthem. Catalonia also has its own police force and controls some of its public services.

Why the controversy?

  • For many years Catalan nationalists have complained that their region sends too much money to poorer parts of Spain.
  • Their budget and taxes are controlled by Madrid.
  • They also say Spain’s changes to their autonomous status in 2010 undermined their distinctive Catalan identity.
  • In a referendum on 1 October, declared illegal by Spain’s Constitutional Court, about 90% of Catalan voters had backed independence. But turnout was only 43%.
  • The Catalan parliament then voted for independence on 27 October. At the same time Madrid moved to impose direct control by invoking Article 155 of the constitution – a first for Spain.

Could Catalonia make a success of independence?

“Madrid nos roba” is a popular secessionist slogan – “Madrid is robbing us.” The received wisdom is that comparatively wealthy Catalonia pays in more than it gets out of the Spanish state.

Catalonia is certainly rich compared with other parts of Spain. It is home to just 16% of the Spanish population, but 19% of its GDP and more than a quarter of Spain’s foreign exports.

It punches above its weight in terms of tourism too – 18 million of Spain’s 75 million tourists chose Catalonia as their primary destination last year, easily the most visited region.

  • Government debt ratio (IMF)
  • GDP per capita in Catalonia, Spain (Statista)
  • OEC data
  • New record for Catalan exports in 2016 (Catalan News)

Catalonia has became one of the most economically dynamic communities in Spain and its capital, Barcelona, one of the most visited by tourists of all European cities and the 12th most popular in the world. There were 18 million visitors to Catalonia in 2016, as many as there were international visitors to the whole of Canada.

What next for Spain?

  • It is the biggest political crisis in Spain for 40 years and a major challenge for the European Union.
  • After years of mutual hostility, independence supporters have proclaimed a Catalan republic and Spain has responded by imposing direct rule on the autonomous region.
  • The two sides are poles apart after the proclamation of independence and imposition of direct rule.
  • One significant gesture the Spanish government could still make to appease Catalan nationalists is to restore some constitutional amendments from 2006 which boosted Catalonia’s status.

Who’s in charge of Catalonia right now?

The central government’s Cabinet has taken over running the Catalan autonomous administration under Article 155 of the constitution — an unprecedented move, approved by the Spanish Senate Friday.

 

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