In Stratfor's Fourth-Quarter Forecast we wrote that tensions between the Spanish state and the Catalan government would intensify. The Spanish and Catalan economies are one of the many areas in which these tensions could manifest.
Financial markets and companies are starting to worry about the economic consequences that would come if Catalonia declares independence. On Oct. 4, the shares of two Catalonia-headquartered banks, CaixaBank and Banco Sabadell, fell by more than 5 percent. The following day, Banco Sabadell's board of directors met to discuss the possibility of moving its legal seat out of Catalonia. In the meantime, drug company Oryzon announced on Oct. 4 a decision to relocate away from Catalonia, while telecommunications company Eurona announced on Oct. 5 that it, too, will move its headquarters from Barcelona to Madrid. (The company said the decision was made a year ago.) Several other businesses throughout Spain have said that they are also following events in the region closely and are considering various options for how to respond.
At this point, it's too early to speak of an exodus of companies from Catalonia. In many cases, business are not really even leaving the region, but rather moving their headquarters or their legal base to other parts of Spain. The move is a preemptive one, as companies want to keep their options open in the event of continued tension between the Spanish central government and the Catalan government — or even Catalan independence.
For banks in particular, changing the location of their legal base is logical, because if Catalonia does gain its independence, it likely would not be a member of the European Union or eurozone, at least initially. The region could still use the euro as its currency if it chose to; Montenegro, for example, uses the euro. But the European Central Bank doesn't back banks in countries that use the euro but don't belong to the eurozone. By moving their legal seats to Spain (which would remain a member of the eurozone), banks can ensure that they're still covered by mechanisms such as the European Deposit Insurance Scheme, which ensures that all deposits up to 100,000 euros are protected.
While the full economic impact of Catalonia's potential independence from Spain is impossible to predict, it would likely be a painful process for both parties — especially if it comes through a unilateral secession. Spain, which is emerging from a deep economic crisis, would lose one of its most economically developed regions and one that represents roughly 20 percent of the nation's GDP. And the uncertainty generated by a Catalan secession would almost certainly hurt the economic recovery.
For Catalonia, in turn, being independent and most likely outside of the European Union — at least temporarily — means paying tariffs on exports to its main trade partners, including Spain. The new Catalan state would also already be in debt, as Madrid and Barcelona would have to determine what percentage of Spain's sovereign debt Catalonia would inherit. Furthermore, the region would have to spend money in areas that are currently covered by the Spanish state, such as defense, which could require tax increases.
Pro-independence forces argue that an independent Catalonia would only face these economic difficulties for a short period of time. They believe the new country would negotiate a fast re-accession to the European Union, because it already complies with the bloc's requirements. (It's not entirely clear if the bloc would be willing to create such a precedent, as many EU members also have separatist-minded regions.) In addition, they argue that gaining control of their taxes would put the new state in control of enough resources to deal with all the new challenges of an independent country, as Catalonia contributes more taxes to the state than it receives back. Regardless, political and economic uncertainty is likely to continue, and the arguments of pro-secessionists may not be enough to keep businesses from moving their bases to more stable locations.