Markets mount pressure on Catalonia to avert secession

Markets mount pressure on Catalonia to avert secession


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The IMF warned on Sunday that the Spanish economy risks losing consumer confidence over ongoing tensions in Catalonia, El Pais reports.

Catalonia accounts for 19% of the Spanish GDP.

The IMF’s warning follows the downgrade of the region by Fitch Ratings last week, as it becoming clear that Madrid may disrupt the flow of funds to the region to avert secession, DW reports. Spain’s richest region is now on a “junk” or non-investment grade territory (BB) with a negative outlook. Fitch followed Standard and Poor’s (S&P) downgrade last Monday, which rates Catalonia at B+ and B.

For the medium run the two agencies project Catalonia is likely to continue servicing its debt. 

Meanwhile, the Spanish government has issued a decree making the movement of companies from Barcelona to Madrid easier, the BBC reports. A Board of Directors can now make such a decision without the support of its shareholders.

A series of Catalonia-based companies have announced their decision to shift their legal address from Barcelona to Madrid, including Gas Natural Fenosa, Banca Mediolanum, and Banco Sabadell. Dogi International, CaixaBank, and Freixenet are also considering the move.

Because of the protests, production has been halted at the Volkswagen and Nestle plants in Catalonia.

The regional government is threatening to declare its independence on Tuesday, after the referendum results have been published. Only 43% of the registered Catalan voters took part in the October 1st referendum, of whom approximately 90% voted in favour of secession.

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