Spanish Foreign Affairs Ministry report: independent Catalonia’s GDP would drop by 20%

Barcelona (ACN).- The Spanish Ministry of Foreign Affairs has drafted a new report warning about the consequences of an independent Catalonia, which notably predicts a 20% drop of the Catalan GDP. As reported in ‘El Periódico’ newspaper on Thursday, the document - which will be sent to embassies throughout the world - foresees a fall in exports towards Europe and Spain, a decrease in foreign investments, a flight of talent, less tourism revenues derived from leisure and working opportunities because of the “lack of a common currency”, and a soar in Catalan debt which would reach 78.4% of the Catalan GDP since it would have to assume 18.9% of the Spanish Government's debt. The Catalan Minister for the Presidency and Government Spokesperson, Francesc Homs, has stated that the report was merely “speculative” and did not correspond to reality. He added that the Spanish Government was “campaigning” against self-determination and described as “nonsensical” making predictions about an independent Catalonia but not allowing Catalans to vote. Following such statements, the Spanish Minister of Foreign Affairs has asked Catalan authorities to back such claims with “empirical evidence” and suggested discussing the contents of the report with the Catalan Minister for the Economy. In addition, García-Margallo confirmed that he had not distributed a Catalan Government's report among the Spanish Embassies, which stated that the Constitution was offering legal ways to organise a self-determination.

According to estimates by the Spanish Ministry of Foreign Affairs, Catalonia would suffer a 20% drop in exports and its sales to other EU countries would fall by 13%. This would amount to a €7.4 billion loss in revenues, based on data from 2012.

The report also warns that independence would mean leaving the euro-zone, which would lead Spanish companies and multinationals based in Catalonia to relocate elsewhere. According to the Spanish Ministry of Foreign Affairs, Catalonia would cease being a strategic location for businesses if it was left out of the monetary and political union and consequently the companies’ relocation would also lead to a flight of talent.

In the section on tourism, the report predicts a drop in both Spanish and foreign visitors. In this sense, the estimates indicate that every 100,000 Spanish tourists who decide not to visit Catalonia would represent a €15.5 million loss for the new country, 0.007 % of the GDP, while the decline in foreign visitors would result in a loss of €90.3 million, 0.04% of the GDP.

Regarding debt and finances, the Ministry of Foreign Affairs strongly believes that Catalonia should assume 18.9% of the Spanish Government's debt, since Catalonia's economy represents 18.9% of the Spanish GDP. This would mean that the total debt would soar to 78.9% of the Catalan GDP. In addition, the report stated that the new Catalan state would no longer benefit from the help of the Spanish Liquidity Fund (FLA), mentioning that Catalonia had received €29.84 million from it. In addition, being outside the EU, it would no longer receive funds from the European Central Bank.

The new report stresses that the Spanish Constitution does not allow for the possibility of holding a self-determination referendum in Catalonia. It also warns that if the Constitution is amended and Catalonia succeeds in becoming an independent state, it would be outside of the European Union and the common currency. Furthermore, if the newly-created state demanded EU membership, the document recalls, all 28 Member-States should accept it, “including Spain”.

“Speculative” information to “campaign” against self-determination, according to Homs

The Minister of the Presidency and Catalan Government Spokesperson, Francesc Homs, has described the document foreseeing a 20% drop of the Catalan GDP as “speculative”. During a speech at the Catalan Parliament, the Minister stated that they would be “countering such speculation with certainties”. He notably explained that every year, 8% of Catalonia’s GDP was allocated to the Spanish State: such a figure “contrasts with pure speculation”, he concluded.

Homs explained that by drafting such a report, the Spanish Government was actually “campaigning” against the self-determination process. He stressed it was “nonsensical” making predictions about an independent Catalonia but not allowing Catalans to vote He added that “it would be logical and consistent from a democratic point of view to accept” such a vote, mentioning the UK as an example.

Spanish Foreign Affairs Minister suggests discussing the report in Catalan Parliament

Following such statements, the Spanish Foreign Affairs Minister, José Manuel García-Margallo, has directly challenged the Catalan Government to “contrast with empirical evidence and data” the figures set forth in the report which “prove the economic non-viability” of an independent Catalonia . Margallo, who was on Thursday in Barcelona, ​​has offered to discuss the report and has suggested that the author of the document, the Director General of International Economic Relations, Fernando Eguidazu, debate its contents with the Catalan Minister of Economy, Andreu Mas-Colell. Both should compare their own figures and studies, and discuss their views on the issue in Parliament, he explained.  However, the Minister has asked for a calmer mood and a “verbal ceasefire” to end “the string of insults”.

In addition, García-Margallo confirmed that he had not distributed a Catalan Government's report among the Spanish Embassies, which stated that the Constitution is offering legal ways to organise a self-determination vote. The Catalan Government had requested the Foreign Affairs Ministry to distribute this document among the Spanish Embassies, since it was answering a previous report from the Spanish Foreign Affairs Ministry stablishing that a self-determination vote was illegal and "immoral". The Spanish document, issued in December, was aiming to provide Spanish Ambassadors with arguments against Catalonia's self-determination in order to influence foreign governments.