Chamber of Commerce issues alert about risk of non-negotiated Catalan secession

The scenario of an independent Catalonia following a pact with Spain would be ideal because the economy and trade would not suffer, but for now the Spanish government is not inclined toward that path. If we assume that the creation of a new Catalan state would unleash a more or less virulent conflict, the Barcelona Chamber of Commerce yesterday presented a study that reviews scenarios of varying severity for commercial and financial accounts. The summary is that the bill for a non-negotiated independence would be negative both for the new Catalan state and for the Spanish state without Catalonia. The Catalan GDP would suffer a greater reversal in all the scenarios, but on the other hand, the strength of the Catalan exports would help its trade balance remain positive even in the most adverse scenario, while Spain would enter into a trade deficit, according to the Chamber.

Catalan surplus

Sales abroad would help to resist the effects of hypothetical boycotts

In the most optimistic scenario, the conflict with Spain would translate into a 10 percent in bilateral trade (see chart), and this would cause the Catalan GDP to fall a cumulative 1.1 percent in the first three to five years, according to the study. However, the Spanish GDP would only drop by 0.3 percent. The main risk for a Spain without Catalonia would be in its trade balance, which would go from a surplus to a deficit in the scenario that the Chamber sees as most realistic (a fall in bilateral trade of between 20 and 30 percent in the event of conflict). Spain would lose the region that brought in almost half of its trade surplus last year. However, even if the conflict were extreme and trade fell by half, Catalonia would resist with a surplus of 5 percent. "This positive trade balance is a fundamental indicator of the viability and sustainability of an economy, because when it is negative it indicates that you are accumulating foreign debt", argued the director of research for the Chamber, Joan Ramon Rovira.

Greater risk for the largest businesses

SMEs would suffer less than big companies

Potential boycotts and trade bills from independence would affect large companies more than small ones, according to the calculations of the Chamber. The industrial sector would end up suffering more than others, as its sales to the rest of the State represent on average 29 percent of total sales, while overall Catalan companies have 22.5 percent of their trade with Spain.

Financing capacity

The savings of the Catalan economy could cover the investment

"By itself, the Catalan economy would have been able to fully finance investment in its own territory and would have a net foreign balance, in contrast with the Spanish economy", yesterday's report concluded. The Catalan savings rate of 26.9 percent in 2013 was higher than Spain's, with 19.1 percent, while investment in Catalonia was 16.2 percent and 18.8 in the case of Spain.

The Chamber also focused on the risk to the financial sector, alerting that seven out of ten branches of the three principal Catalan banks are located in the rest of Spain. Rovira, however, recognized that this is based on figures from 2011 and that the financial map not only has changed significantly since then, but will also change even more in the next few months due to outstanding issues such as the sale of CatalunyaCaixa.

The Finnish GDP ... and the Greek

The economy would have a total weight similar to that of Finland and Greece

The Chamber's report depicted a Catalan economy similar to that of Finland and Greece in terms of GDP. The per capita GDP would also be in line with that of Finland and within ten points of Austria and Denmark.