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In a very unusual movement, Juan Carlos I has issued a short but clear letter one week after the massive demonstration for Catalonia’s independence. The King emphasised the need to remain “united” and asked the people to retake the “values” of the “Democratic Transition”, such as “dialogue” and “the sacrifice of particular interests for the general good”. The Catalan Government does not feel “concerned” by the King’s letter. However, it states that Catalonia “offers solutions” and “does not chase pipe dreams”. Spanish nationalists celebrate the King’s words while PM Mariano Rajoy still remains silent. Catalan and Basque nationalists criticise the King for taking sides and not emphasising values such as “pluralism, diversity, tolerance, and respect for discrepancies”.

The Autonomous Communities are responsible for 18.7% of Spain’s global public debt, while they manage around 40% of the country’s public spending. The Spanish Government’s share represents 76.8% of Spain’s global debt, which reached €804.39 billion at the end of June. Spain’s debt is now 75.9% of the GDP. The Catalan Government has a debt of €43.95 billion. The day before, the Spanish Finance Minister announced that the Catalan Government had a 0.59% deficit for the first half of 2012. Furthermore, Catalonia suffers from a structural fiscal deficit due to Spain’s fiscal redistribution scheme, which annually takes away 8.5% of its GDP, a €17 billion annual solidarity contribution.

Three days after the 1.5 million strong demonstration for Catalonia’s independence, partially fuelled by the Spanish nationalism’s recentralisation attempts and the lack of respect to Catalonia’s self-government, language and culture, the Spanish Government is about to approve a reduction in Catalonia’s share in the definition of the school curriculum. Furthermore, the Spanish Education Minister wants to establish “homogenous evaluations” throughout Spain, although the Catalan Government exclusively manages such evaluations, as well as the school facilities and staff.

By the end of the year, Catalonia must meet a 1.5% deficit target. According to the Spanish Finance Minister, Cristóbal Montoro, the Autonomous Community governments are heading “in the right direction” to honour the deficit objective for 2012. The Catalan Government had a 0.38% deficit at the end of July, according to its own sources. This represents a €767 million deficit, while at the end of July 2011 it had a 2.09 billion deficit, which represents a 63% deficit reduction.

At a conference in Madrid, the President of the Catalan Government, Artur Mas, warned Spain about the “great mistake” of downplaying the massive demonstration for independence. No members of the Spanish Government or leaders of the Socialist Party (PSOE) attended the event, which is unusual. In front of a crowded audience with many foreign press, Catalan MPs and businesspeople, Mas explained that Catalonia “has been trying for decades to reform Spain to make it our state”. However, Catalans are now “tired” from “the lack of respect” and the “disloyalty”. “If Spain denies the fact of Catalonia being a nation”, “many issues will not be solved”. Then “it is logical for a people to solve their future “peacefully, democratically and in a strictly European way”.

“Listen, and listen carefully. Do not get angry if you don’t like what you see. And put solutions on the table, if you have them”, the President of the Catalan Government, Artur Mas told Spain the day after the 1.5 million strong demonstration for Catalonia’s independence. He also stated he will work to create “state structures”. The Spanish Government refused to comment directly on the event, stating it should be analysed “coldly”. However, it said Spain and Catalonia should have other priorities.

In the largest demonstration Barcelona has ever seen, 1.5 million citizens according to the Catalan Police marched in Catalonia’s capital after the banner “Catalonia, Europe’s new state”. The Spanish Government reported a reduced number of 600,000 participants while organisers talked of 2 million participants. The Catalan President did not attend it because of his institutional position, but gave his support at a personal level. Most of the Catalan Government was present. Members from most of the Catalan political parties were also present, including the Socialists (PSC) but at a personal level. The only absentees were representatives from the People’s Party (PP) and anti-Catalan nationalism ‘Ciutadans’ (C’s). Many families gathered for the demonstration which ended with the petition to start the secession process.

The President of the Catalan Government, Artur Mas, leader of the Centre-Right Catalan Nationalist Coalition (CiU), sent a warning message to the rest of Spain and in particular to the Spanish Government. “If there is not an agreement on the economic bases”, “Catalonia’s way to freedom is open”. The Spanish Prime Minister and leader of the People’s Party (PP), Mariano Rajoy, stated on Tuesday morning that Spain and Catalonia should have other priorities. The Spanish Government and most of the rest of Spain are against a new fiscal agreement between Catalonia and Spain, reducing the Catalan solidarity contribution, which represents some €17 billion per year. Furthermore, the Catalan PP has stated it will stop giving its parliamentary support to CiU.

The Catalan Finance Minister, Andreu Mas-Colell, asked the Spanish Government to set up a temporary short-term loan system if the announced Liquidity Fund for the Autonomies is not in place this September. The Catalan Government has been insisting on the urgent need to define and put into force this financial tool to provide the Autonomous Communities with liquidity now their access to international financial markets is impossible as they face unsustainable interest rates. In addition, Mas-Colell stated that it is very likely that more budget cuts will be needed in 2013 to meet the 0.7% deficit target. He also criticised the Spanish Government for imposing stricter deficit objectives for the Autonomies while Brussels gives Spain greater flexibility.

The decision by Spanish Government to restrict access to the public healthcare system could leave 600,000 people in Catalonia (8% of the population) without primary and specialised medical attention. 180,000 of these people would be foreigners. The Catalan Minister for Health, Boi Ruiz, explained that the measure aims to guarantee the universal access to healthcare to all the population, independent of their legal status, but at the same time avoid healthcare tourism.

The Catalan Government stated it will meet the 1.5% deficit target for the Autonomies, although it considers it to be abusive considering they manage the main public services and the Spanish Government has kept for itself all the flexibility allowed by Brussels. In addition, the Catalan Government and the Catalan economy suffer from a perpetual lack of investment by the Spanish Government, which takes away 8.5% of Catalonia’s GDP each year, a quantity much higher than the deficit target. The day after Catalonia’s request for €5 billion from the Liquidity Fund, there was no recognition of Catalonia’s fiscal deficit at a Spanish or European level. There were only calls to continue with the austerity efforts. However, the Catalan Government warns of a “serious problem” if the Liquidity Fund is not in place on time by September.

The Spokesperson for the Catalan Government emphasised the money requested comes from Catalan taxpayers, since Catalonia pays €17 billion each year for services and investments in the rest of Spain. Nonetheless, the Catalan Executive stated it will meet the deficit targets and will follow the already approved austerity plan. The Spanish PM and leader of the People’s Party (PP) confirms it will “help Catalonia as we help the other Autonomous Communities”. However, the PP Spokesperson in Catalonia said the Catalan Government will have to accept whatever the conditions are. The Catalan Socialists want to know what the €5 billion will be spent on before supporting the decision. The Catalan Independence parties criticised the decision for having given away Catalonia’s autonomy.

The Catalan Government’s drug prescription fee and the Spanish Executive’s decision to make citizens pay for a greater share of prescribed drugs have had an effect on inflation. The price of pharmaceutical products has had its highest increase since at least 2003.