stability

Catalan President, Carles Puigdemont considers pro-independence radical left CUP’s veto on the bill for 2016 to “mark a turning point” and assumes that the stability agreement reached between pro-independence forces CUP and cross-party list ‘Junts Pel Sí’ is now broken. However, Puigdemont nuanced that this doesn’t mean that the current term of office is over but assured that from now on ‘Junts Pel Sí’ will rule in minority, with the 62 MPs they have in the 135-seat Catalan Parliament. During a meeting with the Catalan executive held this morning, right before the debate over the budget, Puigdemont stated that the bill for 2016 won’t be passed “at any price” and that the Government’s project is not “for sale” as the main goal continues to be achieving independence

The stability of the parliamentary term in office and the relationship between the Catalan Government and the radical left-wing party CUP are at risk after the latter decided on Tuesday to maintain its total opposition to the 2016 draft budget bill. The Catalan Vice President and Catalan Minister for Tax Office, Oriol Junqueras, said that the decision will have “extremely severe consequences” and that “social services” will be particularly affected. The Catalan Government spokeswoman, Neus Munté, warned that the stability of the current term was “hit” and regretted that CUP didn’t respect the agreement with the pro-independence cross-party list ‘Junts Pel Sí’, the main party in the Parliament, through which they committed to “guarantee parliamentarian stability”. Munté also warned that CUP’s veto “will have consequences” but emphasised the government’s aim to “continue working to put Catalonia at the gates of independence”. CUP’s rejection of the bill, which they considered insufficient and still too “autonomic”, forces the Catalan Government to extend the 2015 budget.

Barcelona’s Chamber of Commerce estimates that the Catalan economy grew by 3.2% in 2015, which is more than double the figure for 2014 and marks a return to pre-crisis levels, when the GDP increased by 1.5%. To “keep on advancing on the path of economic recovery” and to respond to Catalonia’s push for independence and “guarantee the territorial stability”, the president of Barcelona’s Chamber of Commerce, Miquel Valls, called for “the widest consensus possible” amongst the main parties with representation in the Spanish Parliament. He also emphasised the “fundamental” need to keep the relationship and the compromises established with the EU, as the 40-billion-euros rescue package for the banks in Spain led to the recovery of the risk premium and brought back the trust in the Spanish market.

The European Commission’s President, Jean-Claude Juncker, urged Spain to form a “stable government” and do it “as quick as possible, as it belongs to the Eurozone”. Juncker refused to “give an opinion on the movements in some regions and provinces”, referring to Catalonia’s push for independence, but called for “Spain to rise to” the circumstances. In a similar vein, the Euro Parliament’s President, Martin Schulz, assured that the Catalan case would have to be “dealt with within the framework of the Constitution”. The Vice President of Flemish Nationalist party N-VA, Sander Loones, commented that the EC “missed a great opportunity” by not taking up a role as mediator and noted that “saying that it is a Spanish issue only is a way of making sure that nothing will move”.

Employers’ association CECOT's president, Antoni Abad, warned of the economic "instability" that political "stagnation" may cause and expressed his "wish" for Catalonia to constitute a new government "as soon as possible". "We can't continue like this" he stated "98% of CECOT associates refuse the status quo". Abad made these statements this Wednesday at a meeting with Parliament's President, Carme Forcadell, whom in turn assured that she is "hopeful" regarding pro-independence forces 'Junts Pel Sí' and CUP’s negotiations. Abad also asked the government to "facilitate" growth of the Catalan business sector and improve its funding system. CECOT's president also confirmed to Forcadell that Catalonia's economy is recovering in terms of employment and internationalisation capability.

The Catalan Government President and leader of the centre-right pro-Catalan State coalition CiU, Artur Mas, complained on Wednesday that his ally, the left-wing pro-independence party ERC, is not fully honouring their agreement to call elections on 27 September, which should become a 'de facto' vote on independence. According to Mas, the ERC is not offering its full parliamentary support to the Government. "There is an agreement signed in January, and it is also an agreement that talks about stability until elections are called" and "some [parliamentary] votes are being lost, which harm such a stability agreement", he said. Furthermore, he stated that elections will be "expectedly" held on 27 September and did not rule out the option of running in a cross-party list yet. The leader of the left-wing party, Oriol Junqueras, replied that the ERC is honouring the agreement and that Catalans will vote on 27 September.

The President of the Catalan Government, Artur Mas, assessed on Tuesday the Executive’s work during 2014, which he found to be “positive” overall, although he admitted there are still many people in great need and many social and economic challenges ahead. Referring to the current debate on whether to call early elections transformed into a ‘de facto’ referendum on independence from Spain, Mas promised immediate decisions to be announced on Thursday. Before taking the definitive decision and after weeks of admitted “confusion”, the Catalan President wants to hold a last round of talks with the main civil society organisations supporting independence and the left-wing pro-independence party ERC – with whom the governing centre-right pro-Catalan State coalition CiU has shared a parliamentary stability agreement for the last 2 years. “I will not slack” in the self-determination process, Mas stated.

Andreu Mas-Colell, the Catalan Government's Minister for Finance, emphasised that he cannot implement further budget cuts without "severely deteriorating" basic public services. After Catalonia's ministerial spending having dropped by an average of 20.3% with continuous budget cuts since 2010, public spending reduction has reached its "limit", argued Mas-Colell. The Catalan Government has exclusive control over public healthcare, education and social policies, while most of its revenue depends on transfers from the the Spanish Executive, which collects the taxes paid by Catalan citizens. Once again, Mas-Colell accused the Spanish Government of "strangling" Catalonia's finances by recentralising power. He announced he will not carry out an additional €3.3 billion budget reduction in 2015 and asked Madrid to honour pending debts, modify the too-strict deficit targets and review Catalonia's funding scheme.

On Thursday, the Catalan Finance Minister, Andreu Mas-Colell, admitted that Catalonia will not be able to meet the strict 1% deficit target imposed by the Spanish Government for 2014. In fact, the Catalan Executive had previously warned on several occasions that this deficit target was not realistic, despite the great austerity efforts undertaken over the past four years. In addition, despite Spain's economic recovery of 2014 – which is led by Catalonia – and therefore the increase of taxable activity, the Spanish Government will reduce the Catalan executive's funds by €500 million this year while the deficit target becomes stricter. On Wednesday, the Catalan President, Artur Mas, already stated that, considering the austerity measures adopted since 2011, further budget cuts cannot be undertaken in 2014 without dramatically damaging basic public services such as healthcare and education. Instead of relaxing the deficit target or transferring pending funds and debts to the Catalan Government, the Spanish Finance Ministry will reduce the interest rate that the Autonomous Communities have to pay back to 1% for the loans of the Liquifidity Fund (FLA).

Barcelona’s City Council has achieved a cumulative budget surplus of €23.5 million for the last few years, after posting a budget surplus of €139.3 million in 2013. In a press conference on Wednesday, the Deputy Mayor for Economy, Business and Employment, Sònia Recasens also announced that the city had eventually executed 97.55%, (€2.25 billion) of its planned expenditure. Such a figure is higher than the average execution ratio for 2009-2013. The execution ratio for investments amounts to 94% (€356 million) and is also significantly higher than in 2009-2013. In addition, debt levels represent 46.7% of the annual ordinary revenue. Furthermore, the City Council paid its providers in 29.2 days on average. Thanks to these figures, the City Council will make available 1,000 new social housing units in Barcelona.

The Catalan Executive considers the Spanish Government’s decision not to pay them the money corresponding to the revenue from the tax on bank deposits in 2013 “very bad news”. On the 18^th December 2012, the Catalan Executive approved a tax on banks’ global deposits (not on personal deposits) with a general rate of 0.5% but with many reductions. Such a tax already existed in Andalusia, Extremadura and the Canaries. Nine days later, the Spanish Government approved its own tax, but at a 0% rate, therefore not collecting any money but cancelling de facto the Autonomous Communities’ tax. When this happens, the Spanish Executive is legally obliged to compensate the regional government, transferring the equivalent money. Madrid did so with the others, but not with Catalonia. Such a tax would have generated €800 million in revenue in 2013.

Andreu Mas-Colell, Catalan Finance Minister, considered the People’s Party (PP) to be “obstructionist” for blocking the approval of the Catalan Government’s budget for 2014, which was initially scheduled for this week. On Tuesday evening the PP – which runs the Spanish Government – confirmed it was freezing the implementation of the €29.31 billion budget because it included €5 million (0.0176% of the total spending) to fund “electoral processes and citizen consultations”. Mas-Colell warned that by delaying the budget’s implementation, the Catalan Government will lose revenue coming from new taxes and therefore it will have more difficulties meeting the deficit targets for 2014. All the parties in the Catalan Parliament criticised the PP’s initiative except the anti-Catalan nationalism Ciutadans (C’s), which backed the action.

On Monday the People’s Party (PP) announced they were considering freezing the 2014 Catalan Government’s budget of €29.31 billion. The reason is that they include €5 million (0.017% of the total spending) to fund “electoral processes and citizen consultations”, which they fear could fund a self-determination vote. The Catalan Government has the power to organise a consultation process, as well as to modify small items once the budget is approved. The PP was waiting for the Spanish Finance Minister’s green light, since blocking the budget’s approval could have consequences on the objective to reduce public deficit and on meeting the targets imposed by the EU. Cristóbal Montoro argued that, since the blocking would “only last some 30 days”, there is no such danger.