by Kaisa Stucke, CFA
“Catalonia, a new state within Europe” is the slogan of the pro-independence secession movement in the Spanish region of Catalonia. Catalonia has always pined for more autonomy, but calls for secession have intensified as the Spanish economy has suffered from slow growth and corruption scandals have discredited the central government. At the end of September, Catalonia held regional parliamentary elections. These elections were touted by some as a prelude to Catalan secession from Spain. However, the Spanish federal government has made it clear that it will not hold negotiations for secession and, in fact, even holding an independence referendum is considered unconstitutional. Although the majority of Catalans support independence, they could likely be appeased with more autonomy, especially financial autonomy.
This week, we will look at the separatist movement in Catalonia. We will start by giving a brief overview of the region’s history and politics, then look at the roots of the independence movement. We will explore the probability of independence, the potential future relationship between the region and the central government, and the roles of the EU and the Eurozone. As always, we will conclude with market ramifications.