According to Catalan leaders, a referendum on the region’s independence should be held by the end of this year (even if this is forbidden by the Spanish constitution), notes Geoffrey Minne, Economist at ING.
Key Quotes
“Over a 48 hour timeframe, the region that is larger than Finland or Ireland in terms of population could unilaterally declare its independence and take the risk of leaving Spain. Cultural and political motives have been put forward but the economic benefits are far from clear. As with Brexit, we believe that any Catalexit would plunge the region into a long period of uncertainty and would most probably be negative for the private sector.
- Economic costs seem to be a secondary issue in the current debate and the spotlight is more on the cultural and political motives.
- Uncertainty and a drop of households’ purchasing power would probably affect private consumption negatively.
- Exiting Spain automatically means leaving the EU and undermining foreign direct investment and external demand for exporting companies located in Catalonia.
- 45% of Catalan “export” sales head to the rest of Spain and 65% of the rest are exported to the EU.
- In 2016 Catalonia exported more to Portugal than to the US, China and Japan together.
- Neither the use of the euro while being out of the Eurozone nor of a new currency would lead to an enviable situation for the private sector.
- Despite the fact that Catalonia is a net contributor to the Spanish budget, it remains doubtful that secession will lead to a better situation for taxpayers.
- All in all, from an economic perspective the independence project is costly, and uncertainty alone could already have an economic cost.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Next upside target comes at 0.6550
AUD/USD managed well to shrug off the marked advance in the Greenback as well as geopolitical tensions, regaining the area above the 0.6500 hurdle ahead of preliminary PMIs in Australia.
EUR/USD: Further losses now look at 1.0450
Further strength in the US Dollar kept the price action in the risk-associated assets depressed, sending EUR/USD back to the 1.0460 region for the first time since early October 2023 prior to key releases in the real economy.
Gold faces extra upside near term
Gold extends its bullish momentum further above $2,660 on Thursday. XAU/USD rises for the fourth straight day, sponsored by geopolitical risks stemming from the worsening Russia-Ukraine war. Markets await comments from Fed policymakers.
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally
Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.