The Catalan Government could achieve independence without Spain’s consent if a critical mass of people and firms were on board. This would be negative for the rest of Spain. Spain’s government’s debt-to-GDP ratio would jump and the budget deficit would widen substantially. To stabilise its finances, the Spanish government would have to cut spending or raise taxes, causing growth to slow sharply.
But it is extremely unlikely that independence will be achieved this way. While the political crisis might drag on, we do not expect it to have dramatic economic effects. Our best guess is that the situation might knock at most 0.5%-pts off annual Catalan GDP growth for as long as it lasts. As Catalonia makes up 19% of Spain’s economy, the direct effect would be to detract up to 0.1%-pts off Spanish GDP growth.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services