deficit

The Catalan Government will file several formal demands for payment of the €2.02 billion the Spanish Government legally owes Catalonia from the 2008-2013 period. The money represents 1% of Catalonia’s GDP or 7% of the Catalan Government’s budget. According to the Statute of Autonomy, which was approved by the Spanish Parliament and came into force in 2006, the Spanish Government was obliged to invest a percentage equal to or higher than Catalonia’s share of Spain’s GDP between 2007 and 2013 in order to compensate for an historical lack of infrastructure investment. If it was not doing so, the Spanish Executive had to compensate Catalonia financially. The measure was adopted after exhaustive negotiations and was essential to the approval of this law by the Catalan people through a binding referendum. However, the Spanish Government never honoured it. Madrid compensated Catalonia for the lack of investment in 2007, but not for the remaining years.

The Catalan Government deficit amounted to 1.6% of the GDP between January and October, and consequently missed the 1.58% target imposed by the Spanish Government. Madrid was also not able to comply with the limit set for the central government, and had a deficit of 3.96% in November, higher than the 3.8% required for the whole year. The Spanish autonomous communities’ total deficit amounted to 1.12% of the GDP in October, which was in line with the yearly objectives, according to the Spanish Government. When considering the deficit of the autonomous communities, the Spanish state and the Social Security, it amounted to 4.87% of the GDP. The payments of the banking bail-out will also be included in this figure at the end of the year. Brussels had set a global limit of 6.5% for Spain in 2013.

The Catalan Socialist Party (PSC) proposes a “singular redefinition” of Catalonia’s “fitting” within Spain that should be accomplished urgently while waiting for a global reform of the Spanish Constitution. Maurici Lucena, the PSC Spokesperson at the Catalan Parliament, told the CNA that this temporary measure should avoid “the collision” between the two sides. The measure should “shield” Catalonia’s powers, language and culture from recentralisation and homogenisation attempts, and it would also include a fairer fiscal scheme. In the coming weeks, the PSC will try to convince the PSOE – to which is federated – about it. This proposal is quite similar to the Catalan Statute of Autonomy that was approved in 2006, but trimmed in 2010 by the Constitutional Court following an appeal from the People’s Party (PP) – which now runs the Spanish Government.

The Catalan Government’s Advisory Council for the National Transition (CATN), formed of renowned independent experts, emphasised that Catalonia’s independence from Spain would not represent breaking their affective and historical bounds. Furthermore, they insisted on the need to continue and even to increase cooperation “based on a new principle of equality and mutual respect between both parties”. They have suggested different ways to cooperate, through different structures. For instance, they proposed the creation of the ‘Iberian Council’ bringing together Catalonia and Spain, as well as Portugal and Andorra if they wished to, which would mirror the Nordic Council or the Benelux. Furthermore, the CATN issued three other reports, including a detailed analysis of Catalonia’s tax agency.

The Catalan Government put 4 buildings up for auction this Friday, following a plan to rationalise the spaces it uses, reduce spending and increase revenue in order to reduce public deficit. The headquarters of the Catalan Finance Ministry, located in a 8,000 square metre Art-Nouveau building in Barcelona’s Rambla Catalunya, has been bought by an Italian pharmaceutical company through FINAF 92 for €23.2 million. The other building, with a surface of 7,200 square metres, was used by the Catalan Police and is located in front of Barcelona’s Ciutadella Park. It has been bought by the German hotel company MO Düsseldorf Immermannstrasse GmbH & CO. KG for €14.1 million. On Thursday, the Catalan Government announced a plan to reduce its office space by 45% in the coming year by concentrating services. The plan includes selling the most attractive buildings.

The Catalan Finance Minister presented on Thursday a ‘Space Rationalisation and Optimisation Plan’ that foresees to partially leave Barcelona’s city centre and set up offices in cheaper areas. Nonetheless, the measure does not include citizen information and care centres such as schools and community health centres. Furthermore, the initiative also plans to reduce the global office space by using previously-empty floors and concentrating services without laying off staff. The objective is to pass from holding 377,000 square metres to fully occupying 207,000 square metres, a 45% reduction. By doing so, the Catalan Government expects to reduce rents by a 20% average, to cut off indirect costs by 50% and to decrease energy spending by 30%. Furthermore, it will sell the most appealing buildings.

The Catalan Executive considers the Spanish Government’s decision not to pay them the money corresponding to the revenue from the tax on bank deposits in 2013 “very bad news”. On the 18^th December 2012, the Catalan Executive approved a tax on banks’ global deposits (not on personal deposits) with a general rate of 0.5% but with many reductions. Such a tax already existed in Andalusia, Extremadura and the Canaries. Nine days later, the Spanish Government approved its own tax, but at a 0% rate, therefore not collecting any money but cancelling de facto the Autonomous Communities’ tax. When this happens, the Spanish Executive is legally obliged to compensate the regional government, transferring the equivalent money. Madrid did so with the others, but not with Catalonia. Such a tax would have generated €800 million in revenue in 2013.

Andreu Mas-Colell, Catalan Finance Minister, considered the People’s Party (PP) to be “obstructionist” for blocking the approval of the Catalan Government’s budget for 2014, which was initially scheduled for this week. On Tuesday evening the PP – which runs the Spanish Government – confirmed it was freezing the implementation of the €29.31 billion budget because it included €5 million (0.0176% of the total spending) to fund “electoral processes and citizen consultations”. Mas-Colell warned that by delaying the budget’s implementation, the Catalan Government will lose revenue coming from new taxes and therefore it will have more difficulties meeting the deficit targets for 2014. All the parties in the Catalan Parliament criticised the PP’s initiative except the anti-Catalan nationalism Ciutadans (C’s), which backed the action.

On Monday the People’s Party (PP) announced they were considering freezing the 2014 Catalan Government’s budget of €29.31 billion. The reason is that they include €5 million (0.017% of the total spending) to fund “electoral processes and citizen consultations”, which they fear could fund a self-determination vote. The Catalan Government has the power to organise a consultation process, as well as to modify small items once the budget is approved. The PP was waiting for the Spanish Finance Minister’s green light, since blocking the budget’s approval could have consequences on the objective to reduce public deficit and on meeting the targets imposed by the EU. Cristóbal Montoro argued that, since the blocking would “only last some 30 days”, there is no such danger.

The Spanish Prime Minister replied on Tuesday to the President of the Catalan Government’s proposal to discuss in a private meeting the question wording, date, and procedure of Catalonia’s self-determination vote. The Financial Times had also urged the Spanish Government to negotiate and make an offer to Catalans, while adding that “the ingredients” for a solution can be found in Catalonia’s question. While Mariano Rajoy answered he was open to meet with Artur Mas, he added he has nothing to negotiate on and nothing new to say. “The [Spanish] Government will not make any concession” regarding Catalonia’s self-determination. In addition, Rajoy insisted the vote “will not take place”. Furthermore, he added that Catalonia will not have a special funding scheme.

The People’s Party (PP) – which runs the Spanish Government – has announced it is looking at the possibility of freezing the approval of the Catalan Executive’s own budget. They are considering blocking the €29.31 billion budget because it will allocate €5 million (0.017% of the total spending) to a “citizen consultation”. The approval of such a budget is essential to meet the 1% deficit target for 2014. However, the PP fears this money could be used to organise the self-determination vote in 2014. The PP’s leader in Catalonia, Alícia Sánchez-Camacho, has announced she was talking with the Spanish Finance Minister, Cristóbal Montoro, on blocking the budget’s approval. The CiU, running the Catalan Government, has stated it is “a mistake”.

An enormous controversy has been raised around the academic symposium ‘Spain against Catalonia: An historical overview (1714-2014)’ that kicks off this Thursday in Barcelona. At the opening session, the Catalan Minister for the Presidency highlighted the “great affection” that Catalan people feel “towards Spanish society and its plurality and richness”, but not towards “the Spanish State and its institutions”. Furthermore he pointed out that the symposium does not aim “to impose anything”, but “to offer arguments” while “knowing that one single truth” does not exist. The event aims to reflect on the political, economic, social and cultural repression that the Spanish State has inflicted on Catalan people and institutions over the last 300 years. Prestigious university experts will give lectures on specific issues. However, the People’s Party, which runs the Spanish Government, and two other Spanish nationalist parties took actions aimed at cancelling the event.

With the title ‘Spain against Catalonia: an historical overview (1714-2014)’, this academic symposium aims to discuss the political, economic, social and cultural repression the Spanish State has carried out against Catalan institutions and people throughout the last 300 years. The event will offer more than 20 lectures given by prestigious university chairs. It is organised by Catalonia’s Science and Language Academy (IEC) and by the Centre of Contemporary History of Catalonia, which is linked to the Catalan Government. The symposium has raised controversy with its title. The People’s Party (PP), which runs the Spanish Government, has made cancelling the event a condition for holding a dialogue with the Catalan Executive. Furthermore, the PP, the anti-Catalan nationalism Ciutadans (C’s) and the Spanish nationalist and populist UPyD have filed a complaint against the symposium for “spreading hate”. Paradoxically, UPyD compared the symposium with “Nazism”.

Trade unions and the two associations of municipalities in Catalonia have issued a joint manifesto to protest against the Spanish Government’s Local Administration Reform. This reform recentralises powers and services, reducing the municipalities’ capacities and transferring resources to the Provincial Councils, political bodies associated to Spanish centralism and whose members are not directly-elected. The manifesto criticises the Spanish Government “for not having faced any significant reform of its heavy structure”, despite managing 53% of Spain’s public expenditure. The Spanish Government is also forcing the Autonomous Communities to reduce their services and structures.

Thousands of people – 12,000 according to Barcelona’s local police and 200,000 according to the organisers – demonstrated on Sunday in the streets of Barcelona to protest against the Spanish and Catalan Governments’ austerity measures and “antisocial” budgets. Led by the platform ‘Prou Retallades’ (“Stop Budget Cuts”) , the UGT and CCOO trade-unions, as well as political parties and associations, citizens voiced their disapproval of the new pension reform, working fragility and the latest austerity measures. They also specifically protested against the Catalan and Spanish Governments’ budgets for 2014, which they consider “antisocial”. The demonstration organisers criticised the “blind obedience” of the Catalan and Spanish Executives to the European Commission and the Troika.