The two largest separatist parties in Catalonia joined forces on Wednesday to force a referendum on independence from Spain in 2014.
Regional president Artur Mas’ Convergence and Union and the Republican Left of Catalonia hail from opposite ends of the political spectrum but share a desire to secede from the rest of Spain.
The left pledged support for Mas’ fiscal policy which, in turn, will not include deeper spending cuts, even if the region’s finances are in dire straits.
Mas’ previous, conservative coalition enacted budget cuts after the region’s debt was downgraded to junk status. Thus barred from borrowing independently, the regional government in Barcelona requested rescue funds from a central government in Madrid that is itself trying to stave off a debt crisis.
Nevertheless, a majority of Catalans believes that their region would be better off outside Spain. Catalonia accounts for 16 percent of the country’s population, but produces one fifth of its gross domestic product. An estimated $21 billion in Catalan taxes, equivalent to 8 percent of its economic output, is invested in other regions.
To win over the left, Mas’ conservatives have agreed to impose a tax on bank deposits that disproportionately affects the rich while the Republicans say that they are also willing to make concessions to allow the coalition to serve at least until a referendum on independence can be organized.
Such a referendum will probably not be binding and the outcome is unlikely to change the position of the central government, which resists Catalan secession.
Economically, the obstacles to independence are also formidable. As Pierre Briançon pointed out at Reuters last month, “Catalonia would have to devise a new currency” if it left Spain and therefore the eurozone, one “that no one would trust while its current debt was still denominated in euros.”
As a breakaway region, Catalonia would have to reapply for European Union membership which could take years and prompt businesses to relocate in the meantime. “Altogether the region’s GDP could decline by up to 20 percent, aligning it with the rest of Spain, according to some estimates.”