economic

The President of the Catalan Government and leader of the Centre-Right Catalan Nationalist Coalition (CiU), Artur Mas, and the Left-Wing Catalan Independence Party (ERC) agreed on speeding up the process of building “state structures” and drafting the “most social budget” in Catalonia’s recent history. In addition, Mas criticised the ‘third way’ between independence from Spain and the current situation proposed by the Catalan Socialist Party (PSC) and CiU’s ‘number 2’, saying that Catalans “have been trying” this way “for the last 100 years” and “it has never worked”. Spanish nationalist People’s Party (PP) and Ciutadans (C’s) called on Mas to stop the self-determination process. However, the main Catalan parties, from left to right and representing 77% of the parliamentary seats, presented a common text supporting Catalonia’s right to self-determination through a legal vote.

Following a decade of significant increases in the amount of foreign nationals in Catalonia, it appears that many are beginning to leave as job opportunities dry up. In 2000, the percentage of foreign nationals living in Catalonia was 2.9%, while just over a decade later in 2011 this figure had increased to 15.73%. However, in the past couple of years the amount is beginning to reduce: between 2009 and 2013, 44,000 foreign nationals left Catalonia. According to the Spokesperson of non-governmental organisation SOS Racisme, Jose Peñín, immigrants are leaving as “they have less stable contracts and work in more abusive conditions”.

Last week, the Catalan Ombudsman issued a report stating that 4% of children in Catalonia under the age of 16 suffer from food deprivation (50,000 children) and he linked it to the current economic crisis. The Primary Care section of the Catalan Society of Paediatrics refutes the Ombudsman’s report warning that the known cases of undernourished children in Catalonia are due to illness and not to financial problems. They stated there are 750 children with food deprivation and most of whom have chronic diseases that cause malnutrition, such as metabolic disorders, neoplasia or anorexia nervosa. They emphasise that nowadays it is incorrect to talk about children with food deprivation in Catalonia for economic reasons, but they are concerned about the future.

According to data released by the Catalan Finance Ministry, the Catalan economy has stopped the fall in GDP during the second quarter of 2013, since it remained at the same rate of the previous quarter. There has been a slow strengthening of the Catalan economy over the last few months: the fourth quarter of 2012 saw a reduction of 0.7%, the first quarter of 2013 GDP only shrunk by 0.1% and during the second quarter it remained stable at 0% growth. The improvement has been due to the industrial sector, particularly thanks to the exportation of goods which made up for the sustained falling of domestic demand. However, compared to the same figures for last year, the Catalan economy decreased by 1.3%.

The Catalan Finance Minister, Andreu Mas-Colell, accuses the Spanish Government of “asphyxiating” the Autonomous Communities. The 1.58% deficit target imposed to the Catalan Government represents €2.6 billion of further budget adjustment compared to last year’s budget, which ended with a 1.96% deficit. Mas-Colell denounced that the Spanish Executive is “keeping for itself the greatest share of the deficit pie”, while it is only responsible for 50% of Spain’s public spending. The Spanish Government is setting itself a deficit target of 5.2% for 2013 and most of the flexibility allowed by the European Union, which authorised a 6.5% deficit for Spain’s total public sector. Meanwhile, the Autonomous Communities have a deficit target 4 times stricter, although they manage 36% of Spain’s total public spending as well as basic services such as healthcare and education.

Barcelona’s Chamber of Commerce has presented the results of the economic situation of Catalonia during the second quarter of the year. It is estimated that GDP rose by 0.1% on the second quarter, following 18 months of negative growth. President of the Chamber, Miquel Valls, attributes this increase to a new economic model based upon high levels of tourism and exportation, which has boosted activity in the industrial sector. Regarding outlook for the third quarter, the Chamber expects this growth to continue which will improve the business climate within Catalonia.

Artur Mas, President of the Catalan Government, presented the Government Plan for 2013-2016 on Tuesday, emphasising that he aims to complete the four-year office term regardless of whether Catalonia’s self-determination vote is finally held in 2014, as the governing Centre-Right Catalan Nationalist Coalition (CiU) planned with the Left-Wing Catalan Independence Party (ERC). With the Plan, Mas has set 77 objectives in seven different areas, aiming to reaffirm political leadership and show the Catalan Government’s actions in a wide range of areas such as economic recovery, job creation, public services, environment protection, etc. Mas also asked the ERC and the Catalan Socialists (PSC) to sit in the Catalan Government. All the opposition parties except the ERC criticised the Plan.

On Tuesday, the Catalan Government posted the so-called fiscal balances for 2010, showing the difference between the money paid by Catalans in taxes and fees to the Spanish Government and what comes back in form of funds, services and infrastructure. Using the monetary flow formula, Catalonia had a fiscal deficit of €16.54 billion, representing 8.5% of its GDP. Using the benefit formula, the fiscal deficit represents 5.8% of the Catalan GDP (€11.26 billion). The Catalan Finance Minister, Andreu Mas-Colell, stated that both formulas “are complementary” but he found the monetary flow one to be closer to the reality. The figures are similar to the results from previous years as well as to the study published in 2008 by the Spanish Finance Ministry with data from 2005. In the last 25 years, Catalonia has given away 8.1% of its GDP each year.

In March, 2,750 flats and houses were sold in Catalonia, 13.9% less than a year ago in the same month. 32.5% were newly built homes and 67.5% were second hand ones. The previous worst month of the economic crisis had been December 2011, when 2,778 housing units were sold. However, the results from March represent the lowest level of housing sales since January 2007. The reasons behind this drop are the economic recession and the crisis of the real estate sector. In the whole of Spain, housing sales dropped by 12.6% compared to a year ago, with 22,086 flats and houses sold. However, at a Spanish level, the worst month in the last few years is still April 2012, when 21,551 housing units were sold.

Catalonia’s GDP decreased by 0.3% between January and March 2013, while the Spanish economy dropped by 0.7% in the same period. The Catalan figure represents a more gentle drop compared to the last quarter of 2012, when the Catalan economy plummeted by 0.7%. However, looking at the annual figures, results from March 2013 represent a 1.9% drop compared to March 2012. Exports and tourism are the main economic engines. However, the improvement is also due to the fact that domestic consumption continued to post negative figures but they were still better than in the previous months. The data are early estimations calculated by the Catalan Statistics Institute (Ideascat) and the Catalan Economy Ministry, released on Friday.

The offer, presented by Banc Sabadell, has won the tender for the acquisition of Banco Gallego, which was nationalised and owned by the Spanish Fund for Orderly Bank Restructuring (FROB). Banco Gallego was partially owned by Novagalicia Banco, the private bank resulting from Nova Caixa Galicia. The FROB has announced its decision although it also explained that the final details are still “being negotiated”. In the last year and a half, Banc Sabadell has bought the former Caja de Ahorros del Mediterráneo, the business activity of Caixa Penedès (part of Banco Mare Nostrum) and now Banco Gallego.

Artur Mas, the President of the Catalan Government and leader of the Centre-Right Catalan Nationalist Coalition (CiU), is sceptical about the Spanish Executive’s desire to find a negotiated solution regarding Catalonia’s self-determination claims. Asked about the possibility of giving up the self-determination agenda in exchange for more economic resources for the Catalan Executive, Mas stated that “the Spanish Government will not exchange a better fiscal scheme for the self-determination vote”. However, he insisted that public finances are in “an emergency situation”. Therefore, he offered again for the Catalan Independence Party (ERC) and the Catalan Socialist Party (PSC) to sit in the Cabinet because “the situation requires adding strength” in order “to guarantee the survival of Catalonia’s self-government”.

According to Catalan and Spanish Government sources, the Spanish Prime Minister, Mariano Rajoy, and the President of the Catalan Executive, Artur Mas, secretly met this week in Madrid. They mainly talked about the deficit targets for 2013 and Catalonia’s self-determination process. It is the first time they have held a meeting in the last 6 months. On the first issue, they agreed on the need to relax the current 0.7% deficit objective, which would oblige the Catalan Government to carry out a budget adjustment of almost €4.5 billion. No specific figure has been decided on, but Mas said that it will be between 1.5% and 2%, depending on the European Union’s decision regarding Spain’s total deficit. Regarding the self-determination vote, they see things very differently and Rajoy continues to refuse to allow such a vote.

The increase is the highest one registered in Catalonia over the last year. 3,751 home mortgage contracts were signed in January. At the end of 2012, the fiscal benefits for purchasing houses were diminishing and were non-existent by January. Despite this fact, there was a peak in the number of mortgage loans taken out. For the whole of Spain, the number of mortgage loan contracts signed in January reached 25,447, a 44.7% increase in relation to December last year. This is the highest increase since January 2007. Furthermore, the average price of the mortgages signed in January in Catalonia reached €110,418. In year-over-year terms, the number of mortgages signed in Catalonia in January 2013 was 18.58% lower than those signed in January 2012.

The Institut Català de Finances (ICF), the Catalan Government’s financial institution which offers credit, announced that it gave €1.7 billion in loans to 8,500 companies over the last two years in an Action Plan. The plan’s main objective is to foster economic activity and prevent companies from going bankrupt due to liquidity issues. 98% of those who received loans were SMEs and independent workers. The ICF’s Action Plan had the objective of injecting liquidity into the real economy, into the Catalan business network, while the private banks are going through their restructuring process and access to credit is particularly difficult for many companies.