On September 27, the Catalonia region of Spain holds parliamentary elections.

It now seems near-certain that Catalan political parties favoring independence will increase their outright majority of seats, putting the region on a collision path with the central government in Madrid.

Voter Intentions

Thanks to reader Bran who lives in Spain for the El Pais Article that contained the above graph. Translation and anecdotes by me.

Together for Yes

Earlier this year, the political parties Convergence and Union (CiU) and the Republican Left of Catalonia (ERC) entered a coalition. The result was Junts pel Sí which means “Together for Yes”.

If the outcome is as expected, “Together for Yes” would fall one vote short of an outright majority. However, the Popular Unity Candidacy (CUP) is expected to pick up 10-11 seats.

Although CUP did not join the “Together for Yes” coalition, it is firmly in the independence camp.

Total them up and you have 78 votes for independence and 57 votes to remain with Madrid. 

Spanish Banks Warn Against Catalonia Independence

With that backdrop, Madrid and the banks are both upset.

The Financial Times reports Spanish Banks Warn of Financial Risks of Catalonia Independence.

Spain’s leading banks issued a blunt warning about the financial and economic risks surrounding the Catalan campaign for independence, saying they would have to reconsider their presence in the region should a breakaway state find itself outside the eurozone.

The exclusion of Catalonia from the eurozone, following the unilateral rupture of the constitutional framework, would mean that all banks with a presence in Catalonia would face serious problems of legal uncertainty,” said the joint statement issued by the country’s two main banking associations.

Spanish business leaders and top bankers are taking the issue seriously enough to abandon their long-held position on the sidelines of the secession debate.
The statement was issued the same day as another Spanish business organisation warned of “grave damage” that separation would inflict on the Catalan and Spanish economies.

Crucially, the document was signed by Caixabank and Banco Sabadell — the two largest lenders based in Catalonia itself. In a phrase that echoes arguments made by the Spanish government, the document says that “the constitutional order and the membership of the eurozone for all of Spain must be preserved at all times”.

Catalan independence activists argue that an independent state would still belong to the EU, and that issues surrounding the access of Catalan banks to the European Central Bank and other eurozone institutions could be easily solved. Senior European leaders, however, have been consistent in their message that an independent state would be left outside both the EU and the eurozone, at least temporarily.

Showdown in Spain

Soon after the election, expect more talk of a referendum for Catalonia to leave Spain. Also expect the central government in Madrid to declare a referendum illegal and threaten to send in troops to stop it.

Mike “Mish” Shedlock