Businesses vote with feet as economy falters
BARCELONA is bracing for economic uncertainty after investors sold off Spanish bonds and shares in Catalan banks in reaction to Friday’s vote, while Catalonia’s future in the EU single market looked in doubt.
Announcing draconian measures to impose direct rule yesterday, Mariano Rajoy, Spain’s prime minister, said he hoped his planned restoration of constitutional order would mean that “no more companies, and no more investors” would join the exodus after two of the country’s top five banks announced their decision to leave Catalonia. But large global banks and funds are no longer convinced that he can contain the crisis.
“We are going to destroy the work of two generations in Catalonia,” said Joaquín Gay, president of Foment de Treball, the region’s leading business organisation.
Nearly 1,700 companies have moved their headquarters from Catalonia since the referendum three weeks ago. Many business leaders are worried that as a result of the uncertainty the Catalan economy, the largest in Spain and which accounts for a fifth of its GDP, will lose its strength. Earlier this month Spain cut growth forecasts for its economy next year from 2.6 per cent to 2.3 per cent.
On Friday, shares in Catalonian banks fell sharply on Spain’s Ibex-35. CaixaBank, Spain’s third largest lender, immediately fell by around five per cent while Sabadell, the country’s fifth biggest bank, fell roughly six per cent. Both announced earlier this month they planned to move their headquarters from Barcelona. “When you
lose CaixaBank, a symbol of Catalonia, it’s demoralising,” Carlos Rivadulla, of the association Empresaris de Catalunya (Catalan business people), told The Sunday Telegraph.
“Companies like Sabadell are going to move their top management, and then it will be assets leaving. The same thing that happened to Quebec is going to happen here.”
Jaime Guardiola, the chief executive of Sabadell, said that all banks, not just his, had moved deposits out of Catalonia and into safer parts of Spain. “Money is easily scared and even though we tell customers there is no problem, many have decided to move their money,” he said.
The impact on tourism – a crucial constituent of the Barcelona economy – has also been marked.
ForwardKeys, the flight booking forecaster, reported that air travel bookings to Catalonia were down 22 per cent this month compared to the same period last year.
As a result, businesses are suffering. A restaurant owner in Barcelona said: “We’ve seen an alarming drop-off in business of more than 30 per cent since the start of October.
“It’s unsustainable if this carries on.”