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Returning to stability

Catalonia needs to quickly recover in terms of legal security and investments

Carles Puigdemont, former regional premier of Catalonia.
Carles Puigdemont, former regional premier of Catalonia. ASSOCIATED PRESS

One of the most reliable indicators of the damage caused within Catalan society by the pro-independence movement is the huge number of companies that have moved their official headquarters out of the region. Until now, more than 1,800 firms have left, pushed out by an oppressive atmosphere of juridical uncertainty, by the expectations that the situation could turn violent, and due to fears that they could lose the protection afforded to them by European economic stability. Since last Friday, there are reasons to think that with the recovery of political stability, there will be a return of legal security, an intangible concept that is the primary factor conditioning future returns on capital.

The longer it takes for normality to be recovered, the greater the economic damage will be

All of the international economic institutions – and also the Spanish government – agree that the damage caused by the failed independence project is directly related to the time that political and legal security will take to return to Catalonia. The longer it takes for a situation of normality to be recovered, the greater the economic damage will be – from the signing off of investments, to the fall in tourism numbers. And the longer that it takes for this process to be liquidated, the greater the risk that economic instability in Catalonia spreads to the rest of the Spanish economy, not to mention Europe as a whole.

For these reasons it is essential to stabilize the Catalan political and economic scenarios with certain haste. There are reasons to believe that the decisions made by the central government – the application of Article 155 of the Constitution, the calling of regional elections for December 21 – will contribute to achieving this normality, assuming that social or political turmoil does not interfere. In fact, Catalan companies have begun to recover part of the market capitalization that was lost during this crisis. The signs of normalization that come from the markets are the best medicine to recover business confidence.

A boycott of Catalan products will inevitably mean job losses in Andalusia or Extremadura

The political intervention by the state is not enough to bring back stability. One of the indispensable conditions to recover the economic pulse is for there not to be an unwarranted rejection of Catalan products in the rest of Spain. Organized campaigns against Catalan products are not only puerile and difficult to justify, but they are, what’s more, as any citizen knows, unfair and chaotic. But there is an even more powerful reason to reject these campaigns. In a global and highly inter-related economy, when a regional product is punished, undoubtedly intermediate manufacturers and suppliers from other regions also suffer. A boycott of Catalan products will inevitably mean job losses in Andalusia or Extremadura.

It would be convenient for the central government to make a public call in favor of the normality of consumer habits and complete rejection of anti-Catalan campaigns. Gestures are very important, both for economic stability and political spirits. There needs to be an immediate return to a normalized integration of the Spanish economy.

English version by Simon Hunter.

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