The Catalan Minister of Finance meets with City investors and the Financial Times

London (ACN).- The Catalan Minister for Economy and Knowledge, Andreu Mas-Colell, explained the Catalan Government’s efforts to reduce the deficit and boost the economic recovery at a meeting in London. Mas-Colell, who is a former Economics Professor at Berkley and Harvard, held several meetings with investors, banks and media, such as the ‘Financial Times’. He stressed the “seriousness” of the Catalan Government and that “it is doing its homework” to reduce the deficit, as he later told the press in London. Mas-Colell decided to travel to “Europe’s financial capital” to “answer questions” and “exchange points of view”, he said.

The Catalan Finance Minister said that “in London, generally speaking, they understand that the debt of the Autonomous Communities is a small part” of Spain’s total public debt, and that “a bad Spanish policy can cause greater damage to Catalonia, than the other way round”. The Catalan Government’s debt only represents 5% of Spain’s total public debt, while the Catalan economy represents 20% of Spain’s economy. Mas-Colell wanted to clarify to the City investors, banks and media that the Catalan Government is “an open book”, completely transparent, whose finances are public and externally audited.

The Catalan Government had a public deficit of 4.2% of Catalan GDP in 2010, with the previous Left-Wing Government. The new Centre-Right Catalan Nationalist Government is committed to reducing it to 2.66% in 2011, if the Spanish Government refuses to honour its commitments and pay the money it legally owes Catalonia. If the Spanish Government pays what it owes, Catalonia’s deficit would be below 2% for 2011. In any case, in 2012, the Catalan deficit would represent 1.3% and would be gradually reduced in the coming years. Catalonia approved a law limiting the public deficit to 0.14% of the GDP from 2018 onwards just a few weeks ago. In order to reduce the deficit, the Catalan Government dropped public spending by 10% in 2011, passing a restrictive budget for the first time in 30 years. The budget cuts affect all government areas but not to the same degree; for instance healthcare spending was cut by 7% while other services had a budget cuts of 15%, 30% or even 50%.

Andreu Mas-Colell, the Catalan Finance Minister, wanted to meet London’s financial circles and explain to them first-hand his budget austerity plans and measures to boost an economic recovery. Mas-Colell wanted to answer questions about Catalonia’s situation, as well as the general situation in Spain. Mas-Colell’s visit coincided with Standard & Poor’s reduction of Spain’s rating; however, the Catalan Finance Minister said that this specific item had not been discussed because “in the current context of rating reduction cascades”, today’s announcement “was somehow expected”.

The Finance Minister explained to City investors that the debt of the Autonomous Communities only represents 15% of Spain’s total public debt. Mas-Colell added that “they should be five times more worried about the Spanish State’s debt” as it is five times bigger than the debt from the Autonomous Communities. The Autonomous Communities are responsible for 40% of all public spending in Spain, while the State is responsible for around 50%. Some Autonomous Communities, such as Catalonia have more devolved powers, such as prisons or police, and therefore their spending share is bigger than the average. In addition, Autonomous Communities are in charge of basic welfare state policies such as healthcare and education, making their budget cuts affecting more directly citizen everyday life.

Mas-Colell told the press that British investors and journalists “had interest in speculating about the [next Spanish] elections”, to be held on November 20^th. The Catalan Finance Minister said that this interest is “irresistible”, and thus many wanted to know what will be the Catalan Government’s attitude with the new Spanish executive resulting from the elections. “We have explained that we will be there for the new Spanish Government to ensure economic viability and prosperity”, Mas-Colell stated.