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Madrid versus Barcelona

Catalonia's key economic argument for splitting from Spain is that the national government in Madrid milks Catalans dry

Mark Nayler

Monday, 11 September 2017, 16:19

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On Wednesday evening, following a tense 11-hour debate, the Catalonian parliament voted by 72 to 52 in favour of an independence referendum on 1 October. An explosion of secessionist fervour followed, with regional president Carles Puigdemont leading the chamber in a rendition of the Catalan anthem and deputy president Oriol Junqueras tweeting Committed to freedom and democracy! We push on! Its far from clear, though, whether or not the proposed plebiscite would bring the region freedom - in particular, economic freedom - and whether the process now launched is, in fact, democratic.

Catalonias key economic argument for splitting from Spain is that the national government in Madrid milks Catalans dry, taking more of their money in annual taxes than it gives back for investment in public services. Precise figures dont often make an appearance in this debate, but in recent years secessionists have claimed that that discrepancy amounts to billions of euros. A rather more exact statistic quoted by the regions separatists is that the annual budget allocation to Catalonia by the Spanish government has been falling since 2003, when it was 16%. In 2015 that figure had dropped to 9.5%.

Yet the economic critics of Catalonian independence argue that breaking from Spain would not grant the region fiscal freedom at all. This week, for example, a senior economist with the Dutch bank ING claimed that secession will stultify the Catalonian economy for years. Cautionary saving would dent consumer spending, he warns, which would negatively affect the private sector. He also says that foreign investment would wane, especially that given by the EU, which currently accounts for 70% of external investment in the region. The analyst concludes that, proportionally, secession could cost the region more than Brexit will cost the UK (indeed, an independent Catalonia would also find itself out of the EU).

Whilst the economics of Catalonian secession are dauntingly complicated, the politics of it have become toxic. Junqueras gung-ho tweet expresses the separatists conviction that they are fighting for the liberation of their people and for democratic principle. They say that Mariano Rajoys conservative government is autocratic and determined to frustrate Catalans efforts to secure self-determination.

Madrid, on the other hand, called this Wednesdays vote a constitutional and democratic atrocity. The Spanish government argues that the proposed referendum is illegal and has asked Spains constitutional court to declare the vote void. Amidst all this turmoil, there is perhaps only one certainty about Catalonian secession at the moment: that the economic and political disagreements between Madrid and Barcelona will not end on 1 October, whether or not the vote goes ahead.

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