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

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

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

09/30/2017

By Barbara Kollmeyer, MarketWatch

Disputed vote Sunday on northern region's breaking away from Spain will hardly be the end of the issue, according to analysts

Spain faces its worst political crisis in decades ahead of a controversial independence referendum Sunday in the northeastern region of Catalonia, whose notable cities include Barcelona, Girona and Tarragona.

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

A poll taken by Scotland's The National newspaper, an advocate for its own break from the U.K., says the vote for Catalan independence varies greatly depending on whether or not Spain's central government boycotts the vote (http://www.thenational.scot/news/15567874.Huge_upsurge_in_support_for_independence_is_revealed_in_world_exclusive_final_Catalan_poll/?ref=twtrec).

Regardless of the outcome, many expect chaos in Catalonia and possibly elsewhere in Spain this weekend. Here's a quick primer on the vote and what it means for investors and other observers:

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 regional government has vowed to see through. Those wanting to break away from Spain argue that the central government has siphoned the region's wealth 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 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.

On Friday, the Catalan government offered the first look at the all-important, yet basic, plastic containers that will hold the votes cast:

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