Landscape after the battle

Catalonia has passed the test of a terrible crisis with flying colors, followed by the most convulsive months of its political crisis with Spain

1. Business Conference in the Pyrenees. The underlying tension of previous editions has eased up and there is more optimism among the business leaders who have been meeting for thirty-nine years at the La Seu d'Urgell conference. Expectations are high for the economy and it is clear that it has improved when 87% of attendees at one of the presentations said that their businesses have possibilities for growth, and 69% are planning to create new jobs in the next six months.

To the organization's question "What does the landscape look like after the battle?", we have to ask to which battle they are referring, as this nation has experienced many over the last few years and some are not only still ongoing, but have a long way to go. But if it is about the economy, Catalonia has passed the test of a terrible crisis with flying colors, followed by the most convulsive months of its political crisis with Spain, despite the jolts to sectors such as commerce in October and the following recovery. The economy is strong despite, also, threats from the Spanish government, the withdrawal of public funds and custom-designed laws that laid the groundwork for the flight of the legal headquarters of financial companies, regulated businesses, and others that took advantage of the situation to profit from the fiscal policies that only an imperial Madrid and the Basque exception can afford [1].

Despite everything, Catalonia has definitively emerged from the nightmare of the debt crisis, and grew by 3.3% in 2017 (Spain, at 3.1%). Catalan exports accounted for 28% of Spain's total, and unemployment has improved despite the fact that it was still at 12% in Catalonia (17% in Spain) during the first quarter of this year. In practical terms, Catalonia has disconnected the forward thrust of its economy from the political struggles. There are many economically rational arguments that support sovereignty, but there is also uncertainty and fear, along with threats and violent gestures such as the crackdown on October 1st, which could have paralyzed investment and damaged growth. This has not been the case, at least so far.

Catalonia has suffered in overcoming the worst economic crisis, and it is late to prepare itself for the challenges that the majority of Euro-based countries are facing, whether it be the adaptation of the labor market to new technological demands and robot-based automation, improvement of education, or the uncertainty surrounding questions such as Brexit, international commerce, or the effect of progressive rate increases by the ECB on investments and exports. The President of the Generalitat attended the sessions and asked business leaders for their cooperation, assuring them that it was "Spain who chose to break away from us" rather than guarantee dialogue and the assumption of risks. If his predecessors spoke of Denmark and California, Torra spoke of Switzerland as a country to compare oneself to: "Basically, the Swiss eat cheese and vote". Besides, of course, having a solid economy.

Professor of Economics David Vegara emphasized maintaining a budget surplus and spoke of "healthy growth with permission from politics". The main warning was about the creation of "dual" societies in which the job market, preparation, and technology create two rates of job growth in low and high wages with a black hole for middle-income earners. This is the big challenge: attempting to reverse the tendency towards a labor market —and thus a society— split into two sections: the rich and the poor. A symptom of the seriousness of the situation is that Spain, as explained by Raymond Torres (Funcas), a specialist in employment policies, remains near the bottom of the list in Europe with 13.3% of “ni-nis” [young people who neither work nor study] followed only by Greece, Croatia, and Italy. Employment is short-term and highly precarious. New long-term structural policies are urgent, policies that will outlast legislative terms. Once again, the impression is that the experts' diagnostic has been made, but long-term policies never arrive, nor do assessments of policies carried out with public funds.

2. Rajoy goes missing. After poisoning the conflict with Catalonia and using it to arouse Spanish nationalism, Rajoy was devoured by Pedro Sánchez when he thought it was Albert Rivera lying in wait for him. The vote of no-confidence allowed the PSOE to create a government and carry out its electoral campaign from the Moncloa palace. Rajoy has not named a successor and has left the issue of his replacement in the hands of his party. He has stepped aside completely, and will be a very different ex-president from Aznar. More walking, civil registry, cigar, sports pages, and card games than sit-ups, Briatore, and lecturing his successor.

3. Europe does have an immigration policy. Immigration is the EU's greatest challenge, and was the subject of Sánchez's first gesture. A drifting vessel (Aquarius) must be welcomed, but gestures are not enough. Immigration policy must be European in scope, but public opinion has already been expressed in countries such as Italy. Rajoy remained silent and didn't welcome them. Sánchez has taken in the ship. What next? They must be welcomed with guarantees and full rights, which unfortunately requires setting limits. And in order to put limits on populism it will be necessary to speak clearly to public opinion.

Translators notes:

[1] For a number of reasons, the Basque Country and the Madrid region offer particularly advantageous tax breaks to businesses willing to relocate there.

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