Spain: Catalan crisis is not over yet – ING

Steven Trypsteen, Economist at ING, points out that tensions in Catalonia rose further over the weekend and more political unrest at the regional and central levels is expected.

Key Quotes

“The Catalan referendum, which was deemed illegal by the Spanish constitutional court, could not be halted completely by the Spanish government. According to the Catalan government 73% of all polling stations were open. Also according to the Catalan government, 90% of voters voted in favour of independence. Nevertheless, this result is biased towards a yes-vote for independence as most voters who do not support independence did not show up.”

“In the attempt to hinder the Catalan independence referendum, however, more than 750 people were injured. The use of violence was condemned by national and international observers. The mayor of Barcelona said Prime Minister Rajoy needs to resign.”

“After the polling stations closed, Rajoy repeated that the referendum was illegal and that his main duty as a PM is to obey the law and to enforce it. He announced that he will appear in parliament on Monday and that he wants to reflect about the situation with the other parties.”

“We can expect further political unrest in Spain and in Catalonia. The Catalan government already indicated they could declare independence unilaterally soon. Both Spain and Catalonia have minority governments and both could come under pressure in coming days. If tensions don't abate soon, then we might see a slight increase in the Spanish bond spread. If this crisis continues much longer, the extraordinary recovery of the Spanish economy could also be hindered.”