The euro exchange rate, along with the shares on the stock market, plummeted in price on October 27, 2017. This day Spanish Catalonia got its independence.
Events in Catalonia in autumn 2017
Among the deputies who voted, 70 of them supported the resolution on independence, 10 people voted against the adoption of this document, and only two – abstained from voting. Despite the fact that the opposition was not present at the voting.
The adopted resolution defined Catalonia as an independent sovereign legal republic. Thus, this was the impetus for the beginning of the formation of a new government.
Nevertheless, Mariano Rajoy – the Spanish prime minister urged the Spaniards not to panic. He also promised that justice in Catalonia would come back to Spain. How is this possible?
Immediately after the proclamation of independence, the Senate in Madrid added the Article 155 to the Spanish Constitution. The Spanish leadership in Madrid de jure has the right to remove from power the proclaimed administration of Catalonia.
Also, all members of the administration of Catalonia, who allowed the conduct of the referendum, fell under criminal responsibility under the Spanish law.
Economic consequences of the separation of Catalonia
The fact of independence of Catalonia negatively affected not only the investment attractiveness of the region but also the economy of Europe as a whole. That Friday, the euro fell down to 1.1579 against the US dollar. It was the lowest rate of the euro in the last six months.
As for the stock market, the prices for shares in Madrid fell sharply by 2%. Economists are still not sure whether Spain will survive without its most prosperous region.
The high economic development of Catalonia is the main reason for the separation of this region from Spain. It was not surprising because 20% of the fullness of the Spanish budget comes from Catalonia. The GDP of this region exceeds even the GDP of Portugal, Ireland, and Hong Kong.
Even though the average total income of a Catalan by 6 thousand euros more than a Spaniard from other regions, residents are not happy that they give more money to the budget than they get in the form of grants.
Investment attractiveness of Catalonia
Thanks to Barcelona, Catalonia has always been the most attractive region for investment in tourism. With the advent of independence, all budget money will go only to improve the infrastructure and attractiveness of the area. This outcome will be presented to investors by the new Catalan government.
But! Investment attractiveness will be achieved if only legal differences and the Spanish contradiction are removed. If Catalonia becomes an unrecognized republic, this will unequivocally alienate foreign investors. FC Barcelona can withdraw from the League of Europe, and tourists will not want to have problems with a visa to Spain.
Thus, the separation of Catalonia, in general, negatively affected the currency and investment attractiveness of Spain. If you are thinking about investing in this region, you should not rush into the deposits until the situation becomes exhausted. Now we only can hope that the Catalan problem will be resolved soon, and this region will get new opportunities for business and investment.