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What does the future hold for business in Catalonia?

We’ll have to wait and find out, believes president of Small and Medium Business in Catalonia, while the secretary of economy is confident companies and banks will come back

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18 October 2017 02:05 PM

by

Alex Rolandi | Barcelona

“Wait and see.” This is what the president of Pimec (Small and Medium Business in Catalonia), Josep González said on Wednesday in reference to international financier’s decisions to invest in Catalonia. In these uncertain times, with the future still undetermined, he explained that they are in no hurry to carry out business in the country.

In an interview with TV3, González said that there is distrust amidst entrepreneurs, resulting in a slight reduction in investments, as they wait to for the political crisis between Catalonia and Spain to play out and reach a definitive conclusion.

In reference to recent calls ‘for work stoppages’, similar to an unofficial strike, he said he was not in favor of “altering the system of production” for political purposes.

Optimism in the face of uncertainty

As many companies continue to move their legal headquarters outside of Catalonia amidst the ongoing political crisis, the government remains optimistic that banks and companies will eventually return.

The secretary of economy Pere Aragonès believes that the situation is temporary, and will return to the status quo of before regardless of whether Catalonia becomes achieves full sovereignty or not. “When the situation is normalized,” he explained to TV3 that companies will come back to Catalonia because it is where personnel and production centers are.

However, he also admitted some pending business decisions will not be made until the precarious political situation is clarified, noting that it is not a withdrawal of investments. Aragonès affirmed that this is usual during times of political change.

He admitted that the exodus of businesses and banks from Catalonia is a cause for concern for the government, justifying it as a response “to a situation of temporary political uncertainty,” even though “it is a situation we do not like.” 

  • "We want to do this with dialogue and with agreement"

    Pere Aragonès · Secretary of Economy

Damaging the economy

Legal certainty is “fully guaranteed,” explained the secretary of economy, whether or not current regulations continue or the Law of Transition is applied.

However, he accused the Spanish government of “damaging the economy” by taking control of Catalonia’s finances, leaving 400 million euros of the public budget in limbo, meaning investments in support programs for industry, commerce, culture, sport, and research, among others, cannot be carried out.

In a damning appraisal of Spain’s vice-president Soraya Sáenz de Santamaría’s contribution “to generate a message of instability,” he called her “highly irresponsible,” only two days after she warned of a possible recession in Catalonia.

Aragonès also denounced the Spanish government’s haste to change the law in order to make it easier for companies to move their legal headquarters out of Catalonia without having to consult their shareholders.

No delays on payday

The government will not allow a delay in a payment of salaries, Aragonès said, clarifying that it had already used treasury funds.

Asked about whether there would be sufficient capital in the treasury to pay salaries in an independent Catalonia, he explained that if taxes are collected, there will be enough revenue. "We want to do this with dialogue and with agreement," he reiterated.

The secretary of economy also stated that the Spanish government has demonstrated its “absolute inoperability in this intervention delaying payments.”

Future forecasts

It is “absolutely irresponsible” to make economic forecasts for the coming year, ascertained the secretary of economy. He added that it is "unacceptable" for the Spanish government to blame the political situation in Catalonia for the reduction of GDP forecasts for 2018.

In a report sent to the European Commission, the Spanish Ministry of Economy blamed a reduction in “domestic demand” on “the negative impact of the current political situation in Catalonia.”

Aragonès that recalled that, regardless of the political situation, it had already been forecast that there would be less economic growth in 2018 than in 2017.

If Catalonia becomes independent, Spain faces losing around 20% of its economy. Catalonia already produces around 25% of Spain’s exports, and roughly a third of all foreign companies that choose to invest in the region prefer Barcelona as their base.

But in terms of what the future will bring for the Catalan economy, with still no sign of a feasible solution to this political deadlock, people will just have to wait and see. 

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  • Pere Aragonès, Secretary of Economy (by ACN)

  • Pere Aragonès, Secretary of Economy (by ACN)