Political crisis in Catalonia and business exodus
In general terms, Catalonia represents 16% of Spain's population, and it produces 25.6% of Spain's exports, 19% of country’s GDP and 20.7% of foreign investment.
Now, two years after Catalonia’s failed independence push, the situation is still complicated.
On Monday October 14, Spain’s Supreme Court passed tough sentences against politicians and activists behind the independence referendum held on October 1, 2017 in contravention of the Spanish constitution. Nine were found guilty of sedition and four of them were also convicted of misusing public funds. They were jailed for between nine and 13 years, triggering protests in Catalonia as independence supporters blocked roads and railways and clashed with police at Barcelona’s airport.
In that sense, the Ministry of Public Works and Transport of Spain estimates in more than 7.3 million euros the economic losses caused by the protests in Catalonia against the sentence of the "procés" (Catalonian independence movement)
The economic impact of the protests is broken down as follows: 2,1 million for the costs of repairs due to vandalism, 1.2 million in costs incurred at El Prat airport, especially in the parking facilities and nearly 600,000 euros in railway infrastructure. Also, more than 360,000 euros on roads and motorways, 1.2 million in compensation and almost 4 million euros correspond to income that has not been produced by the companies.
As an example of the impact of the recent protests and strike, Barcelona city council said that the first three days of clashes had cost an estimated 1,575,000 euros in damage, with more than 700 large wheelie bins torched and mob violence also damaging traffic lights, street signs, trees and the city's bike-share service.
Moreover, Barcelona's hotels industry said images of the ongoing violence was likely to have a "serious" impact on its tourist industry.
Regarding the business exodus, a total of 5,454 companies moved their headquarters from Catalonia since late 2017, coinciding with the illegal independence referendum called by the Catalan Government, until the first half of this year, according to data from the College of Registrars of Spain. From the fourth quarter of 2017 until now, 1,374 companies have moved their headquarters to Catalonia. With these figures, Catalonia has a negative balance of more than 4,000 companies, which places it at the head of the autonomous communities by loss of companies. Two years after the illegal consultation on 1 October and the failed declaration of independence, few companies have announced their return to Catalonia.
Despite the fact that the flight of companies has moderated from the hottest point of the sovereign crisis, when the decree law approved by the Government facilitated the change of headquarters without having to go through the authorization of the shareholders meeting, Catalonia still has more exits than entrances.
As a whole, in the whole of 2018, 2,359 companies moved from Catalonia to other autonomous communities, mainly Madrid, and 467 arrived, leaving a deficit of 1,892. The great beneficiary of this situation was the Community of Madrid, which reached in 2018 almost 2,500 companies.
The political crisis was enough cause for Catalan companies, among them banks and many of the most emblematic and rooted companies, to move their headquarters to other communities. In that sense, Catalonia's two biggest banks moved their headquarters to other cities “to protect the interests of its customers, shareholders and employers" such as Banco Sabadell to Alicante and Caixabank (the biggest bank in Catalonia and third largest in the country) which headquarter is now in Valencia.
Specifically, in the first quarter of 2019, 349 companies left Catalonia and 194 arrived, leaving a negative balance of 155, while in the second quarter 210 left and 165 arrived, representing a loss of 45 companies. In short, in the first half of the year Catalonia lost 200 companies.
However, these figures are far from those observed in 2017, in the midst of the Catalan conflict, when in just three months 2,536 companies left Catalonia and 2,541 fell into the Community of Madrid.
Now, two years after Catalonia’s failed independence push, the situation is still complicated.
On Monday October 14, Spain’s Supreme Court passed tough sentences against politicians and activists behind the independence referendum held on October 1, 2017 in contravention of the Spanish constitution. Nine were found guilty of sedition and four of them were also convicted of misusing public funds. They were jailed for between nine and 13 years, triggering protests in Catalonia as independence supporters blocked roads and railways and clashed with police at Barcelona’s airport.
In that sense, the Ministry of Public Works and Transport of Spain estimates in more than 7.3 million euros the economic losses caused by the protests in Catalonia against the sentence of the "procés" (Catalonian independence movement)
The economic impact of the protests is broken down as follows: 2,1 million for the costs of repairs due to vandalism, 1.2 million in costs incurred at El Prat airport, especially in the parking facilities and nearly 600,000 euros in railway infrastructure. Also, more than 360,000 euros on roads and motorways, 1.2 million in compensation and almost 4 million euros correspond to income that has not been produced by the companies.
As an example of the impact of the recent protests and strike, Barcelona city council said that the first three days of clashes had cost an estimated 1,575,000 euros in damage, with more than 700 large wheelie bins torched and mob violence also damaging traffic lights, street signs, trees and the city's bike-share service.
Moreover, Barcelona's hotels industry said images of the ongoing violence was likely to have a "serious" impact on its tourist industry.
Regarding the business exodus, a total of 5,454 companies moved their headquarters from Catalonia since late 2017, coinciding with the illegal independence referendum called by the Catalan Government, until the first half of this year, according to data from the College of Registrars of Spain. From the fourth quarter of 2017 until now, 1,374 companies have moved their headquarters to Catalonia. With these figures, Catalonia has a negative balance of more than 4,000 companies, which places it at the head of the autonomous communities by loss of companies. Two years after the illegal consultation on 1 October and the failed declaration of independence, few companies have announced their return to Catalonia.
Despite the fact that the flight of companies has moderated from the hottest point of the sovereign crisis, when the decree law approved by the Government facilitated the change of headquarters without having to go through the authorization of the shareholders meeting, Catalonia still has more exits than entrances.
As a whole, in the whole of 2018, 2,359 companies moved from Catalonia to other autonomous communities, mainly Madrid, and 467 arrived, leaving a deficit of 1,892. The great beneficiary of this situation was the Community of Madrid, which reached in 2018 almost 2,500 companies.
The political crisis was enough cause for Catalan companies, among them banks and many of the most emblematic and rooted companies, to move their headquarters to other communities. In that sense, Catalonia's two biggest banks moved their headquarters to other cities “to protect the interests of its customers, shareholders and employers" such as Banco Sabadell to Alicante and Caixabank (the biggest bank in Catalonia and third largest in the country) which headquarter is now in Valencia.
Specifically, in the first quarter of 2019, 349 companies left Catalonia and 194 arrived, leaving a negative balance of 155, while in the second quarter 210 left and 165 arrived, representing a loss of 45 companies. In short, in the first half of the year Catalonia lost 200 companies.
However, these figures are far from those observed in 2017, in the midst of the Catalan conflict, when in just three months 2,536 companies left Catalonia and 2,541 fell into the Community of Madrid.
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Very interesting article . You 've pointed out the main sectors which could suffer from this political crisis in Catalonia.
ReplyDeleteDo you know to what extent the Spanish footbal industry could be impacted ?
Hello Mamina,
ReplyDeleteThank you for your article. I learnt new information thanks to you. By reading your article I could understand why Spain doesn’t want Catalonia to be independent : That region exports a lot and has a significant share of Spain’s GDP.
I don’t really know Catalonia so can you tell me why Catalonia wants its independence?
Thank you in advance for your answer.
Nelly