Catalan and Spanish GDP would not drop in a friendly independence, states Barcelona Chamber of Commerce

Barcelona (ACN).- The Barcelona Chamber of Commerce, which supports a "legal" and "informed" self-determination vote, published on Thursday a study in which it has calculated how independence would affect business and trade exchanges between the two countries in the first 5 years as well as its impact on Catalonia's and Spain's GDP. Firstly, the business association estimates that in case of an amicable independence process, there will not be a negative impact on the trade exchange flow and therefore, without considering other elements, the GDP would not be affected by this issue. However, if independence was unfriendly and there were commercial boycotts, both Catalonia and Spain would lose. The Chamber has calculated the impact in 5 negative scenarios: from a 10% commercial boycott to a 50% one. However, at the same time the business organisation is ruling out the worst-case scenario as they consider it to be "impossible". If there was "a very intense conflict" with a 30% boycott, which the Chamber considers "very unlikely", Catalonia's GDP would drop by a total of 3.4% over five years. In this case, the Spanish GDP would drop by 0.8%.

The study does not consider the effect of independence on public finances

The Chamber study, which has been coordinated by the Head of Studies of the organisation, Ramon Rovira, does not take into account the effects independence would have on public finances and how much money Catalan institutions would gain if transfers to the rest of Spain were halted or significantly decreased. The last and only study published by the Spanish Government in 2008 estimated that Catalonia was giving away between 6.4% and 8.7% of its annual GDP to the rest of Spain (depending on the calculation formula). This means a transfer of between €13 billion and €17.5 billion in a single year, when the budget of the Catalan Government was set around €30 billion. Therefore, the Catalan economy would benefit from this money and its multiplication effect. However, at the same time, the new Catalan state would have to develop new structures and pay fully for specific services, the exact cost of which is not included in the report. The Chamber study is limited to the commercial and business exchanges between private companies and consumers.

Large companies and industry: the most affected

Catalan companies sell more to the rest of the world than to the rest of Spain. However, Spain is their main market and therefore a hostile reaction from Spanish consumers would affect their sales, but it also would affect the Spanish economy. On top of this, the Chamber found out that the impact is very uneven depending on the sectors and also on the size of the companies. In this vein, large companies, which sell many of their products to the rest of Spain, would be more affected than SMEs.  In addition, firms producing industrial products are also more likely to suffer specific boycotts, according to the Chamber study. Journalists asked Rovira if large companies might be aware of this and for this reason they are the most vocal business actors against independence. The Head of Studies of the Barcelona Chamber of Commerce answered that this might "very well" be one of the reasons.

Catalonia: self-sufficient from a financial point of view

In addition, the Chamber study also concludes that Catalonia is more self-sufficient than Spain from a financial perspective. This is mostly due to Catalonia's higher savings rate (26.9%), which is much higher than the rest of Spain without Catalonia (19.1%). In addition, the investment rate is lower in Catalonia (16.2%) than in the rest of Spain without Catalonia (18.8%). Considering the difference between the savings and the investment rates, the study concludes that Catalonia is a net exporter of capital to other economies, while the Spanish economy without Catalonia has to import capital to ensure its funding. Catalonia would have been able to fund all the investment in its territory and at the same time register a positive and growing investment abroad.

Catalonia's GDP is similar to Finland's and Greece's

The Chamber also calculated the size of Catalonia's GDP compared to other European economies. The Catalan GDP ranks just below Finland's and just above Greece's. In terms of GDP per capita, the Catalan economy ranks below Denmark and above Finland.

The different scenarios

The Chamber calculated that in an amicable scenario, the business and commercial flow between Spain and Catalonia would not be affected and therefore would have a neutral impact on the GDP. It added five negative scenarios besides the "friendly" one.

In a scenario of a "moderate" boycott (with a 10% drop in commercial exchanges), Catalonia would lose €2.2 billion and Spain, €3 billion in an accumulated period of 5 years. This means that Catalonia's GDP would drop by 1.1%, without taking into account other factors. The Spanish one would decrease by 0.3%. For the Chamber, this is the most likely scenario. Besides, Catalonia has currently a 10.7% trade surplus. In this scenario it would decrease to a 9.6% trade surplus, while the rest of Spain without Catalonia would pass from a 0.4% surplus to a 0.1% surplus.

In the two worse scenarios, with 20% and 30% boycotts, Catalonia's GDP would drop by 2.3% and 3.4% respectively, while Spain's would decrease by 0.6% and 0.8%. Finally, in the "impossible" 50% boycott scenario, Catalonia's economy would lose €11.5 billion in an accumulated period of five years. This would represent a drop of 5.7% of its GDP. The rest of Spain would lose €14 billion, representing 1.4% of its GDP. Regarding the balances of trade, Catalonia's would pass from the current 10.7% surplus to a 5% surplus, and the rest of Spain without Catalonia would pass from a 0.4% surplus to a 1% deficit.