Underground economy represents 24.6% of Catalonia's GDP

Madrid (ACN).- The economic crisis and especially the recession starting in 2009 have contributed to the growing weight of the underground economy in Catalonia and in Spain, according to a study presented on Wednesday by the Spanish Ministry of Finance’s Union of Technicians (Gestha). This study is entitled ‘L’economia submergida passa factura. Avançament del frau a Espanya durant la crisi'’ (Underground economy takes its toll. Growing fraud in Spain during the crisis) and is led by Jordi Sardà, a professor at the Tarragona’s Universitat Rovira i Virgili (URV), reveals that according to the latest figures (from 2012) the economy has absorbed 24.6 % of Catalonia’s GDP, hiding €47.36 billion. In 2009 the weight of illegal activity amounted to 22.3 %, meaning that between 2009 and 2012 some €4.6 billion were hidden. The Spanish Executive, through the Spanish Tax Agency, is exclusively in charge of persecuting fiscal fraud throughout the country and collecting taxes. Furthermore, it also manages the Social Security registers and accounts.

The figures also indicate that in 2012 the Catalan underground economy was equal to the underground economy in the whole of Spain, both standing at 24.6 %. These unreported economic activities have led to hidden revenues of €47,360 million in Catalonia and to €253,000 million in the whole of Spain.

By provinces, the Province of Girona (Northern Catalonia) recorded the highest underground economy in Catalonia, which represented 25.6 % of its GDP. It was followed by Barcelona with 24.6 %, Lleida (western Catalonia) with 24.2 % and finally Tarragona (Southern Catalonia) with 23.4%.

Highest increases for Girona and Tarragona

The study has focused on the evolution of the underground economy in recent years, especially during the 2008-2012 period, which was marked by the economic crisis. During such a period, the Province of Girona has gone from having an underground economy of 16.9% to 25.6%, meaning a 34% increase, and the second highest in the four Catalan provinces. It was only overtaken by the Province of Tarragona, whose underground economy grew by 41%, from 13.9% in 2009 to 23.4% in 2012. In the case of Barcelona, ​​the weight of such a hidden economy increased by 26%, from 18.3% to 24.6%, while in the Province of Lleida, such figures grew by 21%, from 19.1% to 24.2%.

This dramatic increase in the weight of the underground economy was mainly due to the construction sector, which has deep roots with the black market, and also to the considerable increase in the unemployment rates, which tripled between 2008 and 2012, passing from 7.6% to 23.94 %. The study states that “the increase in taxes was not accompanied by an efficient tax control” leading to a “multiplication” of political and business frauds.

A considerable use of €500 notes

A relevant detail of the study regards the massive use of €500 notes, despite them being closely controlled by the banking authorities. The Gestha technicians claimed that the €500 notes represented 73.7% of the money circulation value in Spain while it represented only 14% of circulation value in all countries of the Euro-zone. Gestha technicians insisted that these €500 notes are the “favourite tool” for people wishing to conceal their economic activities.