Spain issues 2018 growth warning over Catalan crisis

Spain warned Friday it could lower its forecast for next year's economic growth if Catalonia's separatist challenge persists, as concern mounts over the financial fallout of the crisis.

The central government has given Catalan leader Carles Puigdemont until next Thursday to abandon his push for secession, failing which it may trigger unprecedented constitutional steps that could see Madrid take control of the semi-autonomous region.

Puigdemont's separatist allies pressed him Friday to defy Madrid and declare independence, but with several companies having already left Catalonia, economic pressures are weighing in too for a region that accounts for 19 percent of Spain's GDP.

"If there is no quick solution, we see ourselves having to lower economic forecasts for 2018," deputy prime minister Soraya Saenz de Santamaria warned.

- Pressure to back down -

Uncertainty over the fate of the region of 7.5 million people has damaged business confidence.

Several domestic and foreign companies have already announced they are moving their legal headquarters from the region to other parts of Spain.

Ratings agency Standard and Poor's said the region's economy risked sliding into recession if the crisis dragged on.

Saenz de Santamaria accused Puigdemont of "seriously damaging Catalonia's economic stability".

According to the El Confidencial online daily, the Mobile World Congress, the phone industry's largest annual trade fair held every year in Barcelona, is considering delaying the next session planned for February 2018, and even leaving the seaside city altogether.

While not confirming either way, a spokeswoman for the congress told AFP "we are continuing to monitor developments in Spain and Catalonia and assess any potential impact."

Meanwhile Spain's CEOE business lobby group said this week that Catalonia was already "seriously affected by companies moving their headquarters, the cancellation of new investment, a reduction in tourist reservations and a general outlook of uncertainty and maximum concern."

It warned that the longer the crisis continued, "greater the deterioration of the Catalan economy would be."

- Pressure to break away -

But Puigdemont is also under pressure from his separatist allies, who feel that any decision to back down would only infuriate hundreds of thousands of Catalans who voted to break away from Spain in a banned referendum.

On Friday, the far-left CUP party, an ally of his coalition government, said that "only by proclaiming a republic will we be able to respect what the majority expressed in the polls."

The referendum took place on October 1 despite a court ban that ruled it unconstitutional, and regional authorities say 90 percent chose to split from Spain in a vote marred by police violence.

Turnout was 43 percent, they say, but the figures are impossible to verify as the referendum was not held according to official electoral standards, with no independent commission to oversee the vote.

Puigdemont had pledged to declare independence if the "yes" vote won, but on Tuesday he gave an ambiguous statement.

Saying he accepted a mandate for "Catalonia to become an independent state," he immediately suspended the declaration, calling for more time for talks with Madrid.

Prime Minister Mariano Rajoy retorted that Puigdemont had until next Monday to clarify whether or not he would press ahead with secession and then until next Thursday to reconsider, otherwise Madrid would act. He rejected any form of mediation.

Apart from the CUP's open letter, the Catalan National Assembly, an influential pro-independence association whose followers are ready to take to the streets, called on him to lift his suspension of the independence declaration.

In a statement late Thursday, it said it made no sense to maintain it "given Spain's rejection of dialogue," adding it did not rule out more region-wide strikes like the one that hit Catalonia on October 3.

Source: AFP