Catalonia has just declared its independence this Friday, October 27th. In Madrid, the Spanish Senate, just after that and in retaliation, declared the tutelage of the Catalan region, by the vote of the application of Article 155 of the Spanish Constitution. Spanish Prime Minister Mariano Rajoy has announced that the Catalan president Carles Puigdemont, his government and the head of the Catalan police will be dismissed, and that he wants to organize some regional elections on December 21th.
Both parties are engaged in a legal battle, and the two camps on their positions.
Catalonia intends to become an independent republic. Lets remind that Spain is a monarchy, consisting of large regions, autonomous communities.
The European Union and all its member countries have indicated that they support Madrid and Spain against the desire for independence of Catalonia and its Parties, in the fear of contagious common fragmentation in many parts of the Union. The president of the European Council, Donald Tusk, declared that only Madrid remained the interlocutor of the European Union, and that he did not intend to lead a union of 90 countries…
Catalonia is one of the richest regions in Europe, and the richest in Spain. Catalonia’s GDP represents 19% of the country’s GDP, a little more than Madrid, which is 18.9%. Demographically, it also weighs heavily in the country, with just over 7.4 million inhabitants (16% of the country), the second largest region after Andalusia, and ahead of Madrid.
1600+ companies have since weeks been headquartered outside Catalonia, as have a number of banks (Caixa in particular) and other large companies among the largest in the country. It is the legal and economic uncertainty that drives a large number of companies to this approach. For now it is only a transfer of legal addresses, institutions and jobs remaining on site, for many in the large urban area of Barcelona (5.4 million inhabitants).
Already in a few weeks, tourism, one of the flagship sectors of Catalonia with 12% of its GDP, has fallen. Tourist attendance down 15%, and hotel bookings plummeting. The turnover of the department stores around Plaza Catalunya, in the center of Barcelona, has been down by around 40% in the past month.
Finally, Barcelona is the third largest city of congresses in the world, behind Paris and Vienna (in 2016), and is therefore one of the major business capitals of Europe and a crossroads of important exchanges in the world.
On the face, the economy must suffer from the situation, at least temporarily. But it is impossible to predict what will be the political and social outcome of this declaration of independence.
Hoping that it does not lead to violent conflict.