By Joan Faus
BARCELONA (Reuters) – Five years after Catalonia’s attempt to uncouple itself from Spain sent shockwaves across Europe, the independence movement is grappling with internal divisions, dwindling public support and the economic fallout from a corporate exodus.
Catalonia has lost its status to Madrid as Spain’s No 1 economic powerhouse after thousands of companies moved their legal headquarters out of the region, fearing the 2017 secession drive would leave Catalonia outside the European Union and its protections.
Support for independence has cooled from 49% at the time of the referendum to 41%, while the regional government coalition of parties that support separation is in crisis amid differences about how to take the movement forward.
The fallout serves as a cautionary tale for the independence movement in Scotland, which is pushing to hold another referendum next year on breaking away from the United Kingdom.
While Catalan separatists hold no regrets about their attempted secession, they have drawn lessons from it, including the “need for more support within our society and more international recognition,” said Oriol Junqueras, chairman of the regional ruling party Esquerra Republicana de Catalunya (ERC).
Junqueras was Catalonia’s deputy government head when the region held an independence referendum banned by a Spanish court. Images of riot police storming polling stations were broadcast around the world as the prospect of a disorderly breakaway loomed.
Catalonia on Oct. 27 2017 issued a short-lived independence declaration. The movement fizzled out after the Spanish government imposed direct rule over the autonomous region.
Nine separatists leaders were handed lengthy jail sentences, with Junqueras receiving the longest of 13 years for sedition. They were all pardoned in 2021.
About 3,000 companies moved their registered offices out of Catalonia in the six months following the referendum, according to consulting firm Informa. Among them were banks such as Caixabank and Sabadell, utility firm Naturgy and telecoms provider Cellnex.
Many retained managerial offices in the region, but the legal move means some taxes are paid in rival regions such as Valencia and Madrid, Catalonia hosts fewer business events, and foreign companies have opted for less risky locations.
About 30,000 jobs were not created in Catalonia between the third quarter of 2017 and 2019 due to political and security concerns, according to BBVA bank.
The corporate moves “were very damaging to the Catalan economy and the situation has not been restored,” said Guillem Lopez Casasnovas, a professor in economics at Barcelona’s Pompeu Fabra University and former Bank of Spain board member.
Barcelona’s water group Aigües de Barcelona is the only large company that is known to have returned.
A spokesperson of Caixabank, Spain’s biggest domestic lender, said that its decision to transfer its registered headquarters to Valencia was permanent.
The possibility of returning to Catalonia “is not on the table,” said a Sabadell spokesperson.
Caixabank Foundation, which in 2017 said its registered HQ move was “temporary” but has not returned, declined to comment, along with Naturgy and Cellnex.
Catalonia must send “unequivocal signals” that legal security is guaranteed to encourage companies to return, said Josep Sanchez Llibre, chairman of Catalonia’s main business association Foment del Treball.
BENEFITS FOR MADRID
Madrid has been the main beneficiary of the turmoil.
The Spanish capital leapfrogged Catalonia as the region with the highest GDP from 2017 to 2020. Foreign investment has slowed in Catalonia since 2017, while growing in Madrid.
The Catalan government defends its economic record. Foreign affairs councillor Meritxell Serret, who was part of the 2017 government, said the corporate moves were mostly politically driven and “have not had big economic effects”.
She highlighted lower unemployment than Madrid and the Spanish average and strong industrial and technological sectors.
Junqueras insisted the Catalan separatist movement is still strong, pointing out the increase in pro-independence lawmakers in the past decade.
He said the international community recommended a more conciliatory approach, even though hardliners in the movement disagree.
Like Scotland, Catalonia’s independence movement is now pushing for another referendum, this time with the approval of the Spanish government. But as with the UK government and Scotland´s bid, Spain has so far rejected the proposal.
“We are convinced that negotiation is the right tool to resolve political conflicts,” Junqueras said.
(Reporting by Joan Faus; Additional reporting by Jesús Aguado and Belén Carreño in Madrid; Editing by Charlie Devereux and Andrew Cawthorne)
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