Cat 'alone' ia: Region's secession from Spain would be 'a disaster'

INDEPENDENCE for the region of Catalunya would be 'disastrous' for its long-term future, says the Madrid-based Institute of Economic Studies (IEE).

If Catalunya were to become a separate country from Spain, it would automatically leave the European Union and the euro, meaning it would not be entitled to any help from the Central European Bank (BCE) nor would its people be able to rely upon the protection from EU legislation where national law did not do so.

Catalunya would have to have its own currency, which could suffer a devaluation of as much as 50 per cent when it first came into circulation.

And it could only seek help from the BCE if its banks were Spanish entities, which means their head offices would have to be in Spain

– and therefore, technically, abroad.

Customs duty would apply when transporting goods in and out of Catalunya for sale, and the 'new country' would find exporting and attracting investment extremely difficult because of its not being an established economy and no longer being part of the EU.

This would mean the GNP would plummet.

Also, Catalunya would effectively separate itself from much stronger economies such as France and Germany

– not only Spain – which would leave it rootless and vulnerable.

Plus, the part of Spain's national debt which currently relates to the region

– around 150 billion euros – would become Catalunya's sole responsibility.

The IEE says that if those who want Catalunya to become a separate country believe it would benefit financially from the secession, 'they do not know what they are doing'.