ANC talks down economic impact on possible Spain-Catalonia split

Reporter: Howard Liu、Jeannie Tang、Lisa Wang、Only He (Reported from Spain)

Editor: Howard Liu

The potential independence of Catalonia would not harm its economy and the impacts would be eliminated within two years, said Liz Castro, the spokesman of the Assemblea Nacional Catalana (ANC).

Assemblea Nacional Catalana (ANC) office in Barcelona.

ANC, which is known as Catalan National Assembly in English, is an organisation that seeks the independence of Catalonia from Spain. It has more than 40,000 registered members around the country and has organised a variety of activities including the demonstration with more than one million participants in Barcelona last September on the Catalan National Day.       

“Catalonia has already become the most important area for Spain's economy, even if we split, the business here would still go on and make contributions. Also, Catalonia would still be a member of the EU after independence, ” said Castro.

Liz Castro feels confident about Catalonia's economy. 

Economic experts have said if Catalonia secedes from Spain, it would cause significant political and economic impacts on both sides. Spain has cut its GDP forecast in 2018 and 2019 by 0.1 percentage point to 2.4 percent and 2.1 percent, respectively due to the uncertainty caused by Catalonia's drive for independence.

Catalonia has the highest GDP among all 17 regions in Spain, at 234.65 billion euro in 2017, about one-fifth of the country’s total economic output. It contributes 21 percent of the country’s tax income while only 10 percent of the region's investment was from Madrid, meaning most of the funds was raised in Catalonia.

However, Catalonia has 77 billion euro public debt, of which 68 percent is owe to Spain. “This is our own money!” said Christophe Bostyn, a staff at ANC. “Catalonia pays the most taxes compared with other parts of Spain as it contributes 19 percent of the country’s GPD. However, Catalonia pays in more than it gets out of the Spanish state.”

Christophe Bostyn believes Catalonia has no responsibility to repay the debt.

“We are borrowing our own money to develop our place,” Bostyn added. Besides, he said the title of the debt is “Responsibility of the Kingdom of Spain”, rather than the Spanish government. Therefore, Catalonia has no responsibility to repay the debt.

Local manufactures expressed their worries about a possible boycott by the central government of Catalonia products following the region's independence movement. Spain may impose a tariff on some Catalonia products, such as sparkling wine, and that could be a disaster for the industry.

“I don’t think the Spanish government will boycott Catalonia because Spain needs us to develop their own economy, 70 percent of Spain’s export passes through Catalonia, especially the country is just stepping out from the impact of the financial crisis,” said Bostyn. “Even if the central government does finally boycott Catalan products, it would not be the end of the world since 40 percent of Catalonia’s production is exported to other countries in Europe.”

But the political uncertainty has affected people’s confidence investing in the region. Spain's benchmark index, Ibex 35, fell 1.9 percent almost immediately after the Catalan parliament voted to declare independence from Spain last October.

Professor Cabezuelo Lorenzo at the Complutense University of Madrid observes that some people withdrew their money from banks registered in Catalonia on fears of potential policy change, which may lead to a cash crunch in Catalonia’s banking system.

It is estimated that Spain would lose 20% of its economy if Catalonia secedes, reported by CNN. Alain Cuenca, an economics professor at the University of Zaragoza in Spain told CNN that the short-term outcomes of separation would be negative for both parties. "The establishment of a border would result in a loss of jobs, income and wealth for everybody, whether they live in Catalonia or in the rest of Spain," said Cuenca.

Some reports said lots of companies have moved out of Catalonia, including CaixaBank, but actually not.

While there are media reports saying that more than 3,000 companies have moved out of Catalonia and relocated their headquarters to Madrid. But Castro said, “actually, I don’t think there is anyone moving out, maybe they did change the headquarter address to Madrid on the website, but they have not (physically) moved out and are still making the same contributions to Catalonia’s economy. And you can see Facebook and Amazon have announced their plans to build AI centres in Barcelona. They are not afraid of the independence movement.” She is confident that Catalonia's economic situation is good enough to go independent.


《The Young Financial Post 新報人財經》



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