Economy

Analysis-Catalonia’s economic power has weakened over five years since the separatist bid By Stocksak

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© Stocksak. Oriol Junqueras, President of Republican Left Party (ERC of Catalonia), talks on his cell phone after an interview with Stocksak at the headquarters of ERC, Barcelona, Spain, October 25, 2022. The banner reads “Republican values“. REUTERS/Nacho Doce

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Joan Fauss

BARCELONA (Stocksak), – Five years ago, Catalonia’s attempt at uncoupling itself from Spain shocked Europe. Now, the independence movement is struggling with internal divisions and dwindling support.

After thousands of companies relocated their legal headquarters from Catalonia, Spain, Catalonia lost its status as Spain’s No.1 economic powerhouse. This was in fear that Catalonia would be left out of the European Union and its protections by the 2017 secession drive.

The referendum result has seen support for independence drop from 49% to 41%. Meanwhile, the regional coalition of parties that support separation faces crisis amid disagreements about how to move the movement forward.

The consequences of the fallout serve as a warning to the independence movement in Scotland. They are pushing for a second referendum next year on secession from the United Kingdom.

Although Catalan separatists do not regret their attempt to seize power, they have learned lessons, including the need for more support in our society and international recognition,” stated Oriol Junqueras (chairman of the regional ruling party Esquerra Republicana de Catalunya)

Junqueras was Catalonia’s deputy head of government during the Spanish court’s ban on an independence referendum. Images of riot police storming voting stations were broadcast around world as the possibility of a disorderly splitaway was looming.

Catalonia issued a brief declaration of independence on October 27, 2017. After the Spanish government placed direct control over the autonomous region, the movement was defeated.

Nine separatist leaders were given lengthy prison sentences, with Junqueras getting the longest sentence of 13 years for his sedition. All were pardoned by the government in 2021.

Informa estimates that about 3,000 companies moved out of Catalonia within six months after the referendum. They included banks like Caixabank, Sabadell, utility company Naturgy, and telecoms provider Cellnex.

There are many retained managerial offices in the area, but the legal move means that some taxes are paid elsewhere, such as Madrid and Valencia. Catalonia hosts less business events, and foreign businesses have chosen to stay in less risky areas.

According to BBVA (BME) bank, about 30,000 jobs were not created between the third quarter 2017 and 2019, due to security and political concerns.

Guillem Casasnovas, a former board member of Bank of Spain and professor of economics at Barcelona’s Pompeu Fabra University, stated that the corporate moves “were very harmful to the Catalan economies and the situation hasn’t been restored.”

Barcelona’s water group Aigües de Barcelona is the only large company that is known to have returned.

Caixabank, Spain’s largest domestic lender, stated that it had made the decision to permanently transfer its registered headquarters from Spain to Valencia.

Sabadell spokesperson said that the possibility of Catalonia being returned is “not on the table”.

Caixabank Foundation declined to comment along with Naturgy, Cellnex, and said that its registered headquarters move was “temporary”.

Josep Sanchez Llibre (chairman of Foment del Treball, Catalonia’s main business association) said that Catalonia must send “unambiguous signals” that legal security will be guaranteed to encourage companies back to Catalonia.

MADRID BENEFITS

Madrid has been the biggest beneficiary of the turmoil.

Catalonia lost out to Spain’s capital, which was the region with the most GDP between 2017-2020. Since 2017, foreign investment in Catalonia has been slowing, while Madrid has seen an increase in foreign investment.

The Catalan government defends the economic record. Meritxell Serret from the 2017 government was a foreign affairs councillor. He said that corporate moves were mostly political and had not had major economic consequences.

She emphasized Madrid’s lower unemployment and the Spanish average as well as strong industrial and technological industries.

Junqueras maintained that the Catalan separatist movement was still strong, pointing to the increase in pro independence lawmakers over the past decade.

He stated that the international community favored a more conciliatory approach even though hardliners within the movement disagree.

Catalonia’s independence movements is pushing for a second referendum, this one with Spanish approval, just like Scotland. But as with the UK government and Scotland´s bid, Spain has so far rejected the proposal.

Junqueras stated, “We are convinced negotiation is the best tool to resolve political conflict.”

News Source and Credit

Stocksak Editorial

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