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Home>5 things investors need to know about Catalonia's independence referendum

5 things investors need to know about Catalonia's independence referendum

5 things investors need to know about Catalonia's independence referendum

09/28/2017

By Barbara Kollmeyer, MarketWatch

Disputed vote Oct. 1 will hardly be the end of the issue, say analysts

Spain faces its worst political crisis in decades ahead of a controversial independence referendum Sunday in the northeastern region of Catalonia.

Spanish authorities have sought to stop the vote by arresting Catalan officials and confiscating ballots, setting the stage for what could be a tense showdown. I

Even in a best-case scenario, many expect chaos in Catalonia and possible elsewhere in Spain this weekend. Here's a quick primer on the vote and what it means for investors:

When is the vote and why is it happening? On Sunday, more than 2,000 polling stations may or may not be open for a vote of self-determination that Catalonia's government is determined to see through. Those wanting to break away argue the central government has sucked the region's money away via an unfair tax system. Therein lies the rub. "Giving Catalonia full fiscal autonomy would deprive the central state of an important source of money," wrote analysts at risk consulting firm Stratfor (https://worldview.stratfor.com/article/spain-pumps-brakes-catalonias-independence-drive?id=87179e919a&e=ac3239af46&uuid=f9f18181-4df7-40b6-8543-123133736910&utm_source=The+Daily+Brief&utm_campaign=de6053aabe-EMAIL_CAMPAIGN_2017_09_26&utm_medium=email&utm_term=0_87179e919a-de6053aabe-53677285&mc_cid=de6053aabe&mc_eid=ac3239af46), noting that the region represents a 20% chunk of Spain's economy. It's unclear just how many Catalans want to secede--a poll in the summer showed 49.4% against and 41.1% in favor. A symbolic vote in 2014 showed 80% in favor of separating, though less than half of the 5.4 million eligible voters cast a ballot.

How has the Spanish government responded? Aggressively. Spanish Prime Minister Mariano Rajoy's government and Spain's constitutional court have declared the vote unconstitutional. The government has seized nearly 10 million ballot papers, arrested Catalan officials, shut down websites with information on the vote and ordered local police to prevent any voting Sunday (https://www.theguardian.com/world/2017/sep/26/spain-deploys-police-to-prevent-catalan-independence-vote-catalonia?CMP=calexit).

(https://twitter.com/catalannews/status/912666213448380416)

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