An independent Catalunya would already lose 1.2 billion euros of revenue

Following the decisions made by various large companies in Catalunya last week to re-register their head offices outside the region in order to dissociate themselves from the process of segregation from Spain on which the regional government appears to be insistent, there are expectations that more businesses will be following suit on Monday.

Among those expected to take steps to ensure that they will remain within the EU and the Eurozone are infrastructures giant Abertis, Cellnex and real estate company Colonial, potentially adding to a list which already includes CaixaBank, Gas Natural, , Naturhouse, Oryzon, Eurona, Banco Mediolanum, Arquia Banca, Agbar, La Caixa and Dogi.

In the case of Colonial, one crucial factor may be that after Fitch downgraded Catalunya’s credit rating to “negative” last Friday the agency also issued a warning that the value of office buildings in the city of Barcelona could fall sharply if independence is declared in the region, as Carles Puigdemont (the president of the Catalunya government insists it will).

Some of the businesses changing their registered address have explained that they are doing so in the hope that the move will be only “temporary”, and others, such have Grifols, have decided to stay in Catalunya, but even so the message to the separatists from the business community appears to be clear: in short, “please stop!”

Even Sr Puigdemont reportedly recognizes that the situation is becoming “extremely serious”, and the warnings are all around. On Monday national newspaper El Pais examines how the number of “major” banks registered in Catalunya has now fallen from eleven to zero in just eight years, while El Economista reports that the “massive exodus” of companies would result in an independent Republic of Catalunya receiving 1.2 billion euros less in revenue than it currently does.

And that figure, which related to 26 per cent of company tax paid to the Spanish national government, is calculated taking into account only the major concerns which have already announced that are changing their registered address.

At the same time credit ratings agency Fitch anticipates that it could downgrade Catalunya’s status to “caa1” if independence is declared, placing it at the same level as Belarus, Mongolia and Iraq. No offence to the three examples mentioned, but this will surely send shivers down the spine of any separatists with even a slight understanding of macro-economics.

Even more frightening is that Seat could relocate the car factory which is currently in Martorell, that construction giant FCC may pull out of Catalunya or that even some multi-national corporations will seek greater stability in an alternative location.

These are among the fears which reportedly led Artur Mas, Carles Puigdemont’s predecessor as president of the Catalan government and perhaps the man who more than any other is responsible for the separatist movement having reached where it is today, to express the opinion in an interview with the Financial Times that Catalunya is not yet ready for “real independence”.

Sr Mas recognizes that there is important groundwork still to be done, such as establishing border control and defence, tax collection mechanisms and other vital projects, but since his alleged statement hit the headlines he has denied that those were his exact words. What he intended to say, he reports, was that Catalunya has won the right to be an independent country and that the decisions which must be made in the next few weeks are important ones.

Source: Spanish News Today, October 2017.