Spanish markets plunge as tension over Catalonia rises
Companies begin drawing up plans to move HQs to other regions in Spain should independence be declared
The escalating political crisis between Spain and Catalonia is taking an increasing toll on the economy. Spanish stock markets fell almost three points on Wednesday, the largest drop since Brexit. Meanwhile, with the Catalan government set to declare independence as early as Monday, companies are already drawing up plans to move their headquarters to other Spanish regions.
“This is a clear indication of how insane the regional government of Catalonia is,” said Luis de Guindos, the Spanish economy minister, in an interview with Bloomberg. He dismissed Catalan government calls for external mediation and insisted that independence “is not going to take place.”
The benchmark stock market index in Spain, the IBEX 35, fell 2.85% a day after Catalonia went on general strike and Spanish king, Felipe VI, seemingly opened the door to suspension of the region’s self-government in an unlikely and hawkish televised speech.
"I want to stop this. To stop this drip and stop the economic troubles that this process is already causing”
Inés Arrimadas · Opposition leader in the Catalan Parliament (Cs)
Shares in Catalonia’s largest banks, Caixabank and Banc Sabadell, experienced an even greater drop: more than 5 per cent. On Thursday, Banc Sabadell’s managers will meet to decide whether the bank will move its headquarters to another Spanish region. Caixabank acknowledged it was considering moving out, too.
“We are already seeing how many companies say they are leaving and moving their headquarters,” said Inés Arrimadas, the opposition leader in the Catalan Parliament (Cs). “And I want to stop this. To stop this drip and stop the economic troubles that this process is already causing.”
The president of Foment del Treball (Catalan business and industry association), Joaquim Gay de Montellà, called the plans for independence “negative” and warned that “it would be a mistake for the Catalan economy and businesses, and for Spain as a whole.”
Yet, the Catalan vice president and economy minister, Oriol Junqueras, tried to play down the worrisome signs and insisted that the Catalan economy is in good shape.
Remain in the euro
According to Banc Sabadell sources, the move is aimed at ensuring direct access to European Central Bank liquidity should secession leave Catalonia out of the European Union. It would not necessarily mean closing any offices or transferring Catalan employees to other regions.
However, the bank’s decision has already prompted a backlash from pro-independence supporters. The city council of Gironella, a small town in the north of Catalonia, withdrew €300,000 from Banc Sabadell, according to mayor David Font. “No bank should change its headquarters due to the independence process,” he warned.