Let’s Talk Catalonia

Some of you may have been deeply tuned into the Catalonia situation, and others may not know anything about it. The US Stock market reacted in the early days of an independence referendum, but have since sort of written it off.  In quick, simple terms – here’s our take on the situation.  


  • Where is Catalonia? Catalonia is an autonomous community of Spain located on the eastern extremity of the Iberian Peninsula. It is designated as a nationality by its Statute of Autonomy. Catalonia consists of four provinces: Barcelona, Girona, Lleida, and Tarragona. The capital and largest city is Barcelona, the second-most populated municipality in Spain and the core of the seventh most populous urban area in the European Union.


  • What is Happening (history of the situation)? A referendum held in Catalonia in 2014 indicated that 92% of the 2.3 million voters supported Catalonia’s transformation into a state. 80% of the 2.3 million voters expressed their preference that this state would be independent.


Estimates for the turnout as published by the news media ranged from 37.0%, as given in The Economist and El País among others, to 41.6% as per the Catalan government’s preliminary data.


November 2015, Catalan lawmakers approved a plan for secession from Spain by 2017 with a majority vote 72 to 63. The plan was suspended by the Spanish Constitutional Court, but the Catalan government has insisted that it will complete the plan despite the suspension.


June 2017, the Catalan government announced that an independence referendum would be held 1 October 2017. However, Spanish courts had declared the referendum to be illegal, and the Public Prosecutor’s Office of Catalonia ordered the seizure of paraphernalia related to the referendum, including ballots, ballot boxes, promotional materials, and websites.


September 2017, eleven days prior to the referendum, the Civil Guard mounted an operation to raid the offices of government ministries and detain officials involved in the referendum, which resulted in large protests by supporters.


A controversial independence referendum held in Catalonia on October 1, 2017, asked the question: “Do you want Catalonia to become an independent state in the form of a republic?”. More than 2,020,000 voters (91.96%) answered “Yes” and around 177,000 answered “No”.


Organizers estimated 770,000 further votes were confiscated by the Spanish government who had banned the referendum and attempted to stop it by force. However, anti-independence groups have alleged that there are irregularities in the voting, such as the same people voting more than once.

In the first interview since the referendum, Catalonia’s regional President, Carles Puigdemont, stated he would declare independence as soon as a final vote tally was determined, and would subsequently act in a matter of days.


Spain’s King Felipe criticized the referendum for “erod[ing] the harmony and co-existence within Catalan society itself, managing, unfortunately, to divide it”.


On October 5th, the Constitutional Court of Spain suspended the Catalan parliamentary session.


On Monday, October 9th, Puigdemont said they would be pushing for a Declaration of Independence.


  • Why Does It Matter? Here are just a few of the economic statistics to highlight the importance of Catalonia to Spain:


  • Barcelona is part of Catalonia.
  • Catalonia accounts for 16% of Spain’s population.
  • Generates 20% of Spain’s GDP.
  • Stand-alone, Catalonia would economically be about the size of Denmark.
  • 4th highest GDP per capita in Spain
  • 24% of Spain’s manufacturing output
  • 20% of Spain’s total wholesale trade and retail
  • Also generates 20% of Spain’s tax revenue.
  • Only receives about 14% back for public spending (part of the desired reason for seeking independence).
  • Accounts for 25% of Spain’s total exports.
  • Attracts more than 25% of foreign direct investment into Spain.
  • Holds about 24% of foreign tourism.
  • Less unemployment and more stable earnings environment. “Catalans are more likely to feel well off than Spaniards as a whole”.
  • Most attractive destination in Spain for immigrants. About 750,000 in net migration to Catalonia since 2008 (some from within Spain, about 500,000 foreigners).
  • 22% of Spain’s total R&D spending comes from Catalonia.


We can slice and dice it however we want.  Most of the drive to seek independence is partly because Catalans want to be economically free-standing.  The rest of it is part historic and part geopolitical.


Our concern ties back to the PIIGS nations that were in sovereign debt default risk in the 2010/2011 period. Remember the sovereign debt crisis which included Portugal, Ireland, Italy, Greece, and Spain?  Many fear that a split Spain may carry with it many sovereign debt risks.  And, we don’t know how the EU will generally treat Catalonia as (what it would likely see legally) as a renegade republic (since the Spanish Government says that the Independence referendum is unconstitutional).


Next Step:  Carles Puigdemont, Catalan Parliament President says that there will be a meeting of the Catalan Parliament on Monday and the results of the Independence referendum will be “discussed”. If ratified, it would create the next stage of conflict between the Spanish Government and the Catalan Government.  Much could happen over the weekend, we’ll see what Monday brings.

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