In January, Spain terminated its contract with S&P (tired of paying for being knocked done by the ratings agency). S&P then replaced its management team in Spain and now, in March, of its own accord, – because Spain did not ask for the qualification – decided, last Friday, to raise its credit rating on the country by one step, to A- from BBB+, with a “positive” outlook.
More than 93% of German companies believe that the economic situation in Spain is ‘good’ or ‘satisfactory’, 25 points higher than two years ago. This is according to the bi-yearly survey “German Companies in Spain” published by German Chamber of Commerce for Spain in collaboration with the IESE Business School.
Ever since the nationalists in Catalonia flared a low key rebellion against Madrid, the region seems close to the world depicted by Aldous Huxley. They are attempting to create a brand new life, erasing all Spanish vestiges from early childhood onwards.
Whether the secessionists lead the new Catalonia’s government or not after December 21 elections, the weakened Spanish government will be inevitably forced to go through a negotiated constitutional reform which, amongst other objectives, will aim to satisfy the unrepentant Catalan nationalism.
Almost at the same time as the Catalan separatists tried to get the European Union on the side of its cause, the European authorities have had to deal with insurgency in Poland. The latter’s judicial reform put at the risk the division of powers and the judicial independence of a country in the region. While Spain had to implement article 155 of its Constitution in order to contain the crisis of authority which the secessionist attempt implied, the EU has had to press its own “nuclear button”, article 7 of the Treaty, to restrain Polish government.
The stability in Spain’s growth in the fourth quarter compared with the third is the result of two forces pulling in opposite directions: the strength of the export markets has offset the adverse effect of increased political uncertainty in Catalonia.
Ciudadanos (37 seats) was the party which won the most votes in Catalonia but will not be able to form a government. The independent block still has control of the Parlament with 70 seats versus the 57 won by the constitutionalists and the 68 needed for an absolute majority. Ciudadanos’ victory is significant, a difficult milestone to achieve given the current electoral law. But the secessionists were able to hold on to their absolute majority in the regional parliament.
On the day when Catalonia votes for a new government, the region’s citizens are very confused about the reasons and where the blame lies for the situation they find themselves in.
For the time being, Spain’s economy is maintaining its cruising speed and GDP will grow 3.1% this year, according to estimates. But Catalonia’s progress is visibly slowing, with figures continually being downgraded.
The outcome of the Catalonia elections on December 21 will not easily bring a quick solution to the problem in the region. But both in the case of the independence movement losing the majority of seats (it no longer had the majority of votes and it’s almost impossible for it to obtain) or there being a division over the future, the path towards normalisation will have started.