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Independence drive takes heavy toll on Catalan economy
MADRID, Dec 15, 2017 (BSS/AFP) – The Catalan economy, one of the most
dynamic among Spain’s regions, has stalled this autumn during the
independence push by its leaders, though analysts aren’t yet sure about the
long-term consequences.
Here is a breakdown of the economic fallout for Catalonia since the
contested October 1 vote and the subsequent declaration of independence,
which prompted Madrid to dismiss the regional government and call new
elections for December 21.
– Tourism cools –
The violent skirmishes between voters and police trying to halt the vote,
and the huge demonstrations by both pro- and anti-independence factions, have
prompted many visitors to steer clear of Catalonia, the most visited region
of Spain.
The number of visitors dropped five percent in October after increasing
during the previous eight months, even after the terror attack in Barcelona
and nearby Cambrils in mid-August.
And tourist bookings at Barcelona hotels for the first quarter of 2018 are
down about 10 percent from the year earlier.
Tourism generates about 12 percent of Catalonia’s GDP.
– Employment and spending sag –
More than 400,000 people work in the tourism industry, where the
traditional end-of-season spike in unemployment was “more accentuated” this
year, according to the Pimec employers’ association.
Jobless numbers rose again in November, even as they declined in Madrid.
A study by the ESADE business school found that one-fourth of Catalan
employers have scaled back hiring plans for next year, and nearly half — 46
percent — have frozen investment plans.
The crisis has also hit retail sales overall, which fell 4 percent in
Catalonia in October compared with a stable reading for Spain as a whole.
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The pace of car sales, seen as a key indicator of consumer confidence,
slowed sharply in October and November, backing the positive trend at the
national level.
– Companies flee, boycott risk –
Catalonia generates nearly a fifth of Spain’s GDP, but uncertainty about
the independence drive has made businesses nervous.
About 3,000 companies have transferred their legal headquarters — but not
their employees — elsewhere, either because of doubts about their legal
status in case of secession, or a risk of having their products or services
boycotted.
Banks in particular, including CaixaBank and Banco Sabadell, worry that
they could be cut off from access to European Central Bank financing.
The decision was also aimed at reassuring clients after huge cash
withdrawals.
The moves have dented the region’s business-friendly reputation and could
make it harder to lure new companies in the future, though the central
government in Madrid has called on companies to return to the region.
– Cloudy prospects –
In October the Spanish government lowered its 2018 growth forecast to 2.3
percent from 2.6 percent, a marked decline from the 3.1 percent expected for
2017.
Since then, Prime Minister Mariano Rajoy has pledged that growth could
return to 3 percent next year if “normalcy” returns to the region after the
December 21 vote.
But in case of a prolonged crisis, the Bank of Spain has warned of the
risk of recession for the next two years, as nervous consumers hold back on
major spending decisions, such as homes or cars.
“The negative impact will depend largely on how long the uncertainty lasts
and its intensity,” said Miguel Cardoso, chief economist for Spain at BBVA
bank.
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