7 reasons why Spain doesn’t want Catalonia independence

The Spanish government will do everything it can to prevent Catalonia successfully seceding.

Whether it is suppressing the referendum or violently attacking proponents of secession, the federal government is ensuring Catalonia does not become its own state.

Can anyone blame Spain? The federal government has mismanaged the budget, wasted taxpayer dollars and implemented policies that have been detrimental to the national economy. Catalonia is a cash cow!

Spain needs Catalonia; Catalonia does not need Spain.

Moreover, as Ambrose Evans-Pritchard of the London Telegraph notes, Catalonia exiting Spain will be an immense threat to the European Union project.

She writes:

Luis de Guindos, has openly warned that Catalonia will suffer a “brutal pauperisation” if it presses ahead. He said the region would suffer a collapse in GDP of 25 per cent to 30 per cent, a doubling of unemployment, and a devaluation of up to 50 per cent once it had been thrown out of the euro.

This is a threat, not a prediction. Such a collapse would occur only if Spain chose to bring it about by making life hell for the Catalan state: by closing its economic borders, by using its veto in Brussels to ensure that Catalonia cannot rejoin the EU or remain in monetary union, and by blocking Catalan accession to global bodies such as the International Monetary Fund.

The problem for Spain is that if it acted in such a fashion, it would bring a commensurate catastrophe upon itself. Catalonia is the richest and most dynamic region of Spain — along with the Basque country — and makes up a fifth of the economy. Such circumstances would entail a partial break-up of the euro, re-opening that Pandora’s Box. The status of Spain’s sovereign debt would be unclear. Why would the Catalans uphold their share of these liabilities if subjected to a boycott? Markets would have to presume that the debts of the rump kingdom would no longer be 99 per cent of GDP but more like 120 per cent. This burden would be borne by a poorer society and one that would necessarily be in an economic slump itself.

Here are seven reasons why Spain is preventing Catalonia from leaving the country:

1. Catalonia accounts for 16 percent of Spain’s entire population.
2. Catalonia represents 19 percent of the nation’s gross domestic product (GDP).
3. Catalonia generates 25 percent of Spanish exports.
4. If Catalonia secedes, it would no longer be a member of the European Union (EU), which means it is not beholden to Brussels like Spain is.
5. Should Catalonia secede, the debt-to-GDP ratio would spike from 98 percent to 120 percent.
6. Unemployment could increase significantly if Catalonia leaves because new borders will impact jobs and businesses.
7. Spain warned a Catalonia currency would be devalued by 50 percent because it won’t be attached to the euro, but it is far more likely that the euro will take a hit since more states are trying to flee the EU project.