23. April 2019, 11:00 Uhr
Ever since its delusive cessation at the beginning of last year, most investors and analysts inside and outside of Spain had chosen to close their eyes at the pending disaster threatening to resurface again in the heated atmosphere of Spain’s general election, triggered by the very issue at stake: Catalonia breaking away from the rest of the country.
The minority government of the socialist prime minister Pedro Sanchez was toppled by Catalan MPs in the national parliament; in the ensuing election campaign, both Sanchez and his right-wing populist challengers from the Vox party in particular have been pounding the Catalan issue time and again, making it a central element of the next government’s policy.
What can only be viewed as a classic paradox, Spain‘s membership of the EU as well as the Eurozone stands to aggravate the consequences, if secession comes into effect eventually. For, akin to the scenario sketched during Scotland’s attempt at independence in 2014, Catalonia will automatically leave the EU and also, in the opinion of the majority of experts, the Eurozone on breaking away from Spain, only to ask for re-admittance. The President of the European Commission, Jean-Claude Juncker, has stated then as two years ago when the threat of secession became imminent for the first time that there will be no retaining the status quo for regions seceding from member countries.
If this scenario becomes reality, massive friction for trade and the region’s economy as a whole will follow: Analogous to Brexit, Catalonia would cease to be a member of the single market, thus its exports to the EU would be hit by tariffs, most prominently those of its substantial car industry. A new currency to be created from scratch virtually over night circulating beside the Euro would certainly trade at a fraction of the single currency‘s value.
Yet we do not expect the eventual secession of Catalonia to have an effect on the Euro’s stability: Though Spain would suffer a severe economic blow, the continuance of the Euro as legal tender on the Iberian Peninsula would not be jeopardised. Even an independent Catalonia would maintain the Euro as parallel currency. Hence, we have not included a Catalan secession crisis into our analytical probability tree on the risk of an all-out, renewed Euro crisis within the foreseeable future, which, regarding the developments in Italian politics and the still substantial threat of a no-deal Brexit, remains very much live all the same.