‘Catalonia needs investments, not uncertainty’

By Viva van Jaarsveld

Skyscraper Torre Agbar in Barcelona. Photographer: Viva van Jaarsveld

The conflict about independence in Catalonia has caused the Catalan economy damages of around € 1 billion in the fourth quarter of 2017. Until today, 3.700 companies have moved their headquarters out of Catalonia and many people are losing their jobs. What does this mean for the current and future economy of Catalonia?

According to the international and national media, the economic situation of Catalonia is very uncertain at the moment. Economist Marta Araque, who works as a professor at University Pompeu Fabra in Barcelona, argues that particularly the Spanish national media seem to have a clear policy to spread political and economic uncertainty. According to her, that mainly caused the political disturbances in Catalonia.

Araque is claims: ‘’Spain’s central government in Madrid has made certain decisions that are remarkable, such as giving facilities to enterprises for the purpose of moving their headquarters to other places in Spain, or outside Spain. Currently, these enterprises can move to other places outside of Catalonia on a particular condition of the central government: the companies need a majority of their board to vote in favour of moving their headquarters outside of Catalonia.’’

‘’Many Catalans think that the central government wants to put pressure on them’’

Before this, the decision of moving the headquarter of a company outside of Catalonia wasn’t made by the majority of the general assembly of a company: this decision was in the hands of the stakeholders. ‘’This new condition for moving your company is an anti-democratic policy. Catalonia is a very democratic region, and that’s why it’s so important here to respect the stakeholders. This regulation is completely facilitated by the central government in Madrid. For many Catalans it feels like the central government just wanted to put economic pressure on the Catalan government’’, Araque argues, who takes a pro-independence stand.

Moreover, some very big Spanish banks, such as Caixa Bank and Banco Sabadell moved their headquarters to other parts of Spain. These banks claim they made this decision because of the enormous pressure from their clients, they said. Araque claims: ‘’People wanted to change banks for putting their savings there. The risk for bank to lose many clients is too big when they’re staying in a region with a very uncertain political and economic situation.’’

‘’National and international media are spreading the word that the Catalan economy is getting more and more problems’’

According to Ricard Bellera, secretary of Labor and Economy at Spanish biggest trade union, CCOO, Catalans want to be independent because the central government in Madrid and the European Union are cutting into the three most important competences of people: health, education and social policies.

‘’When the crisis started in 2010, the state and the EU needed to cut money in almost every competence, including these three very important competences. The competences health, education and social policies cost a lot of money for a state, but they’re very important for people. With as a consequence, an increasing tension between the communities of the regions in Spain and the state,’’ argues Bellera.

Bellera stresses that especially when a country is hit by a financial crisis, like in 2010, the competences health, education and social policies are very important in life. ‘’If you don’t have a good job and you’re ill, there should be a health system that makes sure you get help.’’ Bellera, like Araque, sees the central government in Madrid as somehow responsible for this development.

Since Spain’s financial crisis in 2010, there has been a certain recovery. But after the Catalan referendum, it’s seems for people, including Catalans, the economy has stagnated again. Spanish media, such as El País and El Mundo and also internationally the Guardian and the Economist, are reporting that the Catalan economy is getting into more and more problems.

‘’According to these media, companies start with moving headquarters, then companies will move their investments, and lastly the production centres of companies will move to another place in Spain or out of the country,’’ Araque argues. The last two measures didn’t happen yet, but that’s the message of the media and most people trust this message. ‘’People are changing their attitudes. They assume that it’s better to wait before buying a new car, because Spain is recovering from a huge crisis. And now there’s a situation of political disturbance and economic uncertainly. If things go wrong, they still have €10.000 euros on their bank accounts.’’

‘’People are changing their attitudes: they wait before buying’’

Araque stresses: ‘’Companies are aware of the decrease of customer loyalty. They also take this into account when they’re making decisions. For example, companies hire two people instead of three for setting up a campaign. Before the Catalan referendum of October last year, they would have hired three people. In short: capitalism and markets have a big influence on each other. The components uncertainty, attitude and expectation have a very big influence on capitalism and markets.’’

Anna Blanco, a 37-year-old women who lives in Barcelona, also thinks that current economic climate in Catalonia is very uncertain. According to her, a lot has to change if Catalonia wants to have a better economic situation. A few months ago, right after the illegal independence referendum, she was more positive about the economic situation than she’s right now. ‘’The results of the first elections show that there was a clear majority of 80% of the people who were agreeing that there had to be a referendum, and if this would have happened, they would accept a referendum. That’s a vast majority you can rely on. Right now, 51% of the Catalans is in favour of independence. I don’t think that you can trust on a majority of 51%, that’s absolutely crazy.’’

Economist Araque argues that the main problem for Catalonia’s economic future is the customer loyalty. Besides that, Catalonia needs to invest in many different types of new policies. ‘’On the 17th of January, there will be regional elections for Catalonia’s new parliament?? We just had elections on 21 december. It will be a problem if controlling Catalonia doesn’t work with this new parliament. The more time passes, the higher the debt will be. Catalonia will notice how the psychological element, of people who are uncertain will affect the economy.’’

Araque says Catalonia needs to make the economy stronger, solid and sustainable. “Catalonia needs to reinvest the growth they had in the last few years, in its economy. The region needs to invest in different types of policies, such as: the trading system, employment and demography. Catalonia has one of the worst trading systems in the world and they’re too many flexible jobs,’’Arague claims. The Catalan government should act responsible and start investing.