Catalonia’s Post-“Independence” Economic Hangover Sets In
Catalonia’s Post-“Independence” Economic Hangover Sets In from Wolf Street
Uncertainty, threats, and counter-threats.
Catalonia’s recent declaration of independence may have been a largely symbolic act but the economic hangover it has left in its wake is very real. Last month the number of unemployed in the region rose by 7,391 — the highest rise in a month of November since 2009. During the same period the number of people registered with social security fell by 4,038 — the sharpest fall since November 2013.
The economic pain is already taking a psychological toll. According to a new poll published by Spain’s Center for Sociological Research (CIS for its Spanish acronym), the number of households that fear that their economic situation will worsen in the next six months surged from 14.2% in August to 22.2% in October. By contrast, in Spain as a whole there was hardly any change, with the rate barely budging from 15.1% to 15.6%.
Almost 3,000 firms have shifted the registered address of their headquarters outside Catalonia since the banned referendum on October 1, many to Madrid. Although the exodus has slowed in recent weeks, every day dozens of Catalan companies continue to change their registered office, despite the express appeal of Spain’s Prime Minister, Mariano Rajoy, to stop doing so after the activation of Article 155 of the Constitution.
The Catalan exodus has so far been purely administrative, with companies effectively shifting domiciles, the ‘brass plate’ of the business, to avoid legal and tax complications rather than moving staff or operations, which would have huge cost and logistical implications.
Many of the companies worry that secession would leave them outside the Eurozone and exposed to the unpredictable policies and possible tax grabs of a new republic burdened with heavy debts. Such fears were compounded last week when Catalonia’s deposed president Carles Puigdemont suggested that the region may be better off outside not just Spain, but also the European Union.