Catalonia crisis: Spain SLASHES economic growth forecasts over ‘uncertain’ independence
The country has curbed economic expectations in a budget plan sent to Brussels, downgrading predictions from 2.6 per cent to 2.3 per cent growth.
The Mediterranean nation claims Catalonia is a destabilising factor for Spain’s economy in the plan.
Spain’s government says the downgrading is partly due to the economic cycle, but also due to: “A slight containment of domestic demand, resulting from the negative impact of the uncertainty associated with the current political situation in Catalonia.”
Spain and Catalonia are currently locked in a political stand-off after the region’s controversial independence vote, now more than a fortnight ago.
Catalan president Carles Puigdemont has “suspended” his region’s declaration of independence and called for more talks, however Spain’s government has refused to engage as it claims the referendum was illegal.
Prime minister Mariano Rajoy has already warned Mr Puigdemont about the economic impact of the controversial vote.
In a letter on Monday to the separatist leader, he wrote: “The latest steps taken by you and your government are causing a major divide in Catalan society, as well as enormous economic uncertainty that threatens people’s well-being.”
Those who back unity between Catalonia and Spain believe a split would spell economic and political disaster.
The two biggest Catalan banks have already joined hundreds of businesses that have moved their headquarters to other parts of Spain.
Ratings agencies have also warned the region could experience a recession if the political instability continues.
However separatists point out that Catalonia contributes about a fifth of Spain’s economic output. They argue that the country pays more into Spain than it gets back – and could become more prosperous if they went it alone.
The economic forecasts come as Mr Puigdemont yesterday refused to say whether he has declared independence or not.
Spain has accused the region of “prolonging uncertainty” and has given Catalonia until Thursday to give a clear answer.
Spain’s deputy PM Soraya Saenz de Santamaria made it clear in a press conference on Monday morning that the Catalan leader must answer ‘yes’ or ‘no’ to the independence question.
Spanish PM Mariano Rajoy had given Mr Puigdemont a deadline of 10am that day to answer on the question of whether Catalonia had split from Spain.
But instead of a one-word answer, the Catalan leader sent Mr Rajoy a two-page letter fudging the issue for a second time.
The letter urged a reversal of the central government’s “repression” of the Catalan people and its leaders and organise a meeting to try to find a solution through peaceful dialogue.
He said in the letter: “Our proposal for dialogue is sincere, despite everything that has happened, but logically it’s incompatible with the current climate of growing repression and threats.”