With the numbers in favor of Catalonia’s secession reaching a whopping 90% of voters, the issues in Spain are just getting started. Even if the push for independence doesn’t materialize, the sheer existence of the referendum is a massive warning to the rest of the world. The European political and economic ecosystems are in a state of uncontrolled chaos, and the effects span beyond the EU.
The secession of Catalonia will wildly alter the performance of multiple industries in the United States. Foreign markets, especially those in Europe, will become less secure as investors pull their money away from volatility. And domestic markets will experience a combination of two outcomes: (1) multinational companies will move out of Catalonia in anticipation of the imposition of massive tariffs from both Spain and the EU (CNBC already released a list of 10 companies that have decided to relocate), which will limit expansion for American-led companies while simultaneously locking down the security of their US headquarters, potentially offering more homegrown jobs; and (2) the US will see increased investment in some of its more secure sectors – like real estate – if foreign investors are looking to move money out of the Euro’s domain into a single-country-led currency like the dollar.
With those ideas in mind, another concern lies in Spain having to raise tariffs to offset the revenue that it will lose from Catalonia’s exit. A huge reason for Catalonia’s anger in the first place is that they contribute more to the national government that they receive. The Guardian wrote that “with 7.45 million people, the region accounts for 16% of Spain’s population. Its €215.6bn (£191bn) economy, larger than that of most countries in the eurozone, generates more than one-fifth of Spanish GDP, while Catalonia’s exports of €65.2bn represent more than one-quarter of the national total. At about €37bn, foreign investment in Catalonia accounts for more than one-quarter of inward investment to Spain.” So in their mind, having their own culture, government, and language, accompanied by the drastic economic losses, all boil together to create the collective distaste for Madrid. Not to mention the decades under the Franco regime in which they were prohibited to even speak their own language.
All in all, the US was smart to say that it’s an internal issue that Spain and Catalonia need to deal with on their own. But if Catalonia’s declaration of Independence follows through, the US needs to be ready to deal with, and maneuver, the economic, political, and social puzzle that will inevitably be presented at that time.