That was another weekend in Spain. And this time, not because of the great parties, beaches, people and food. Catalonia held an illegal referendum on the independence of the region and more than 800 people were injured in clashes with the police.
Understanding the policies behind what is happening can be challenging, especially if you haven’t really got into this topic. We have gathered a few key facts to understand the news coming from Catalonia and the implications for the markets.
Why was the Catalan referendum illegal?
Because the Spanish High Court ruled this way and because Catalonia is just a region. The referendum (like it or not) is null and void and its results will not allow the region to secede from Spain or the Eurozone. Thus, you should not worry about it.
Why do Catalans want to leave Spain at all?
Catalonia – one of the richest regions of Spain. They have strong industry and most wealthy families come from this region. Catalonia lost its autonomy during the Spanish Civil War. And, having regained a part of its former power in 2006, the region makes efforts to restore independence.
How does the Spanish government respond to the referendum?
Clear and clear: Catalonia will remain part of Spain. Prime Minister Mariano Rajoy spoke in favor of aggressive measures on this issue, sending the police to suppress the protesters “at any cost”. In addition, the central government arrested representatives of the Catalan government, confiscated millions of ballots and closed voting sites. The police also closed about 300 polling stations.
Will violence solve this internal crisis?
No, it will not. However, the central government sends a message like Don Corleone (the central character of the film “The Godfather”) – you should not joke with us. If we have to stop you, we’ll do it. The mayor of Barcelona, where the police suffered the most, asked for help in stopping the “outrageous” response of the Moncloa Palace. Several representatives of the European Union condemned the violence that took place on the streets.
What to expect on Monday?
The Spanish IBEX 30 is unlikely to be strong after these events. Naturally, on Monday there can be more volatility than usual, however, a correction is expected over the course of the week. Political uncertainty can support the demand for asylum assets.