The economy counts in the regional elections of Catalonia


February 14th, Catalonia will hold regional elections. Although an event of this type has traditionally determined public debate in Spain, for the first time in decades it does not make headlines in Spanish or European newspapers, now focused on vaccines and political measures related to the virus. Somehow, the change in the debate has pushed independence back down the list of sentimental and political concerns for Catalans, as they now focus on more fundamental issues such as health or bleak economic forecasts. and work.

Even though the economy is key to any electoral process anywhere in the world, in Catalonia it tends to be overshadowed by the pervasive debate over nationality and identity. national and identity debate. EPICENTER, the network of European think tanks, has produced a report which highlights the costs that a hypothetical independence of Catalonia from the rest of Spain and, therefore, from the European Union.

From an institutional point of view, the document concludes that the impact would be particularly sensitive in public finances marked by the debt of Catalonia, the highest of all the Spanish autonomous communities at 6.48% of the national total. Thus, the debt/GDP ratio of an independent Catalonia would skyrocket to between 112 and 126%. Catalonia would also leave the Eurozone, meaning it would have to create a new monetary policy essentially from scratch.

Regarding the private sector, the study identifies three areas in which the effects would be particularly notable. Firstly, in foreign trade, for which the EU market represents 80% of Catalonia’s sales abroad (17 of its 20 main trading partners are there). Secondly, in tourism, which, although difficult to predict given the global circumstances, in the months following the unilateral declaration of independence in 2017, Catalonia recorded losses of 319 million euros, according to the hoteliers in the region.

Finally, foreign investments, 78% of which are of European origin out of 78% of the total, so leaving the Union would almost stop the influx of capital. The relocation of companies is also to be considered, as it is estimated that since October 2017 some 6,000 companies have moved their headquarters.

On the other hand, in the short term, the tax revenues of the Catalan administration would be greater than with the Spanish autonomous financing system, since the region would manage the total amount collected. However, that wouldn’t imply that the Catalans enjoyed a higher disposable income. The executive should lower taxes in proportion to the increase in tax revenue. This seems unlikely, as Catalonia is the community with the highest taxes regardless of personal income, has the worst score in tax competitiveness and has the highest number of its own taxes (15). This leads one to think that independence would be characterized by great interventionism.

Oriol Junqueras, the president of the pro-Catalan separatist ERC party, delivers a speech during an election campaign rally in Barcelona on January 29, 2021. EPA-EFE//ENRIC FONTCUBERTA

In addition – which seems to be always forgotten by supporters of independence – the cost of taking charge of powers such as Defence, Justice or Foreign Affairs, would represent an additional expense of between 37,900 and 39,800 M €, which would discourage any intention to reduce the tax burden by the rulers of an independent state.

A few days before the election, polls predict that the social fracture of Catalonia, divided into two antagonistic halves, will be reflected in the electoral results. Beyond conjectures and utopias, it is certain that, for the first time in decades, the rather few Catalans who are expected to go to the polls on February 14 determining the composition of their regional parliament will do so as part of their day-to-day concerns, rather than sentimental diatribes.

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