Spain warns Catalonia independence bid risks economic meltdown

Bloomberg

Spain warned Catalonia it risks economic chaos should the rebel region continue with its pursuit of independence, with the government in Madrid saying it stood ready to intervene and reassert control. As the standoff heads into a critical few days, Deputy Prime Minister Soraya Saenz de Santamaría said ministers were ready to stop Catalan President Carles Puigdemont. Spanish Energy Minister Alvaro Nadal said the push to break away is doing more damage to the Catalan economy than August’s terrorist attacks as companies decamp.
“If this man unilaterally declares independence, measures will have to be taken and the government will take measures,” Sáenz told Spanish radio. She said action would be taken even if the government doesn’t win cross-party backing. “We will seek support, but the act will not be left without a response from the government.” After a weekend of mass demonstrations in favor of Spanish unity, the country was braced for an escalation in its biggest existential crisis in more than four decades and one that threatens the breakup of a European sovereign state.
Puigdemont has vowed to press ahead with his independence drive and is due to address the regional parliament on Tuesday, while Rajoy pledged that “national unity will be maintained” by using all instruments available to him. That includes suspending the regional administration and sending in security forces.

Catalan Overture
A senior member of the Catalan regional government called for dialogue with Spain, saying that all of Europe faces economic damage unless a resolution is found. Raul Romeva, foreign affairs chief for the separatist government in Barcelona, insisted that the door was open for talks if PM Mariano Rajoy was willing to engage.
“We need two to tango, we need the other side to be at the table,” Romeva said. “We’re always going to be at the negotiation table, but to start negotiations we need the other party to negotiate with.”
The leaders of the Catalan National Assembly, a civic group that led a series of massive pro-independence demonstrations and works closely with Puigdemont, vowed that tomorrow’s session will see the president declare independence in a video posted on Twitter. Marta Pascal, who heads Puigdemont’s party, told the BBC that there will be a symbolic recognition of the result of the illegal referendum held on October 1, but no unilateral declaration of a new state.
“The risk of this getting a lot worse, with correspondingly bad market development for Spanish assets, is still too great for my risk appetite,” said Erik Nielsen, chief economist at UniCredit SpA. He predicted at least another week of pressure on Spanish and Catalan debt and assets before “things will eventually normalise.”
Spanish 10-year bonds rose, with the spread over German bunds narrowing by six basis points at 11:38 am. in Madrid to 119 basis points.
Spain’s benchmark stock index has lost about 1.2 percent since Catalans voted in defiance of the Constitutional Court, while Catalan companies including lender CaixaBank SA are moving their legal bases out of the region.