Jittery businessmen in Catalonia, spooked by signs the recent tumult over the region's latest bid to secede from Spain is hurting the local economy, have put their investment plans on ice as they brace for the Catalan parliamentary election on Thursday.
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Catalan retail sales and tourist arrivals are falling and unemployment is edging higher, recent figures show.
Investors and consumers react badly to uncertainty and conflict, and Catalonia's push to break away has brought Spain's worst institutional crisis in decades.
The Catalan regional government was removed from office by Spain's national government in late October after regional lawmakers passed a declaration of independence that Spanish authorities deemed illegal. That came after an Oct. 1 independence referendum in Catalonia which the Spanish Constitutional Court disallowed. Catalonia is currently being run by direct rule from Madrid.
The upcoming election looks like being a tight race between Catalans who support secession and those who prefer to remain in Spain.
A lot is at stake when polling stations open for 7.5 million voters in a region that accounts for 19 percent of Spain's gross domestic product. A triumph for pro-independence parties could unleash further social and political mayhem that would ripple unpredictably across Spain, which has the fourth-largest economy in the 19-country eurozone. Citing the uncertainty over Catalonia, Spain's central bank on Friday cut its growth forecasts for next year and 2019 to 2.4 percent and 2.1 percent respectively, shaving a percentage point off its previous predictions.
A recent survey of more than 100 company directors in the northeastern Spanish region found that 46 percent of them have put their 2018 spending plans on hold while they await the election outcome.
They have reason to fear: Just over half of them said their company sales fell from September to November, by an average of 9.5 percent, making them wary of the future, according to a survey published last week by the economist Fernando Trias de Bes in collaboration with the ESADE Business School. The surveyed companies together employ almost 158,000 people.
Just over 3,000 businesses have moved their official headquarters out of Catalonia in recent months, anxious they might no longer be covered by Spanish and European Union laws if Catalonia broke away. Those companies included Catalonia's top two banks, Caixabank and Sabadell, and Planeta, the world's leading Spanish-language publisher.
Retail sales in Catalonia fell almost 4 percent in October compared with the same month last year. That was the steepest drop in Spain, where nationally the fall was 0.1 percent, the national statistics agency INE said.
Tourist arrivals in Catalonia, including its popular capital Barcelona, that month were 4.7 percent down on 2016, according to the INE. It was the only one of Spain's 17 autonomous regions where numbers fell. Nationally, visitor numbers were 1.8 percent up.
Meanwhile, Catalonia this year witnessed its biggest November jump in unemployment in eight years, though the increase was a relatively modest 7,400 people and the jobless rate also increased in nine other autonomous regions.
The economic slowdown has been the clearest and most immediate consequence of the Catalan independence push.
For Spain's conservative prime minister, Mariano Rajoy, the blame for it lies with those who are trying to upset the status quo.
"The Catalan economy is being choked by the independence drive," he said earlier this month.
Ousted Catalan leader Carles Puigdemont, a fugitive who is in Belgium, argues that Catalonia hands over too much tax revenue to the national government and would be better off going it alone. He insisted in a recent newspaper interview that the Catalan economy is stable and noted that companies aren't moving their production out of the region.