Catalan Business Circle Study: Spain Cannot Overcome Crisis

A study concludes that Spain has no capacity to overcome the crisis  and is drawing itself into economic breakdown

 

“There is no light for Spain at the end of the tunnel” asserted economics Nobel prize winner Joseph Stiglitz. This has been borne out by the Cercle Català de Negocis, the Catalan Business Circle in a set of Studies carefully analyzing macroeconomic data on the Spanish State, collating forecasts made by international bodies governing the global economy.

 

The resulting scenario is certainly distressing: in the current year, 2013, Spain has to place debt on the market equivalent to 20% of its GDP, a figure that could go up to 114% of GDP by 2020 and reach 129% by 2030, according to European Commission forecasts. This sustained increase of debt will bleed all the investment potential of the Spanish State, which will have to concentrate its efforts on satisfying all the resulting financial costs.

 

Furthermore, Spanish society is undergoing accelerated aging: by 2021 there will be 9.3 million people over 65. This means that pension expenditure will go up from the current 10% of GDP until it reaches between 20% and 30% of GDP by 2050.

 

A state with this kind of debt, suffocated by interest payments and pension commitments, will hardly be able to find the necessary funds to fuel its productive economy, which means keeping the same unemployment rate or even making it higher. It is a vicious circle.

 

What horizon then for the coming decades? A persisting decrease of GDP per capita that by 2020 will be five points lower that in 2005, and which in twenty-years' time will drop 16 points; increasing emigration —the second wave in three generations— of mostly young people; and an increasing tax burden to be borne by the remaining labor force. In 2010 there were four workers for each pensioner, but according to estimations there will be only two in forty-years' time. The conclusion is pretty obvious: Spain is heading for another default, the twenty-fifth in its history.

 

A Catalan State, on the other hand, would be more than viable economically. That is what numerous indicators point to and many international experts certify. Some relevant data to back it up: in 2011 the balance of trade stood at 3,9% of Catalonia’s GDP whereas in Spain they had a negative -4,2%. An independent Catalonia would take fourth place in the European ranking of GDP per capita.

 

The CCN goes further and maintains that Catalonia’s independence would act as a trigger for Spain. According to the CCN, there are now two different economic models coexisting in the Spanish State which are incompatible:  the Catalan one, based on flexible innovative SMEs with great exporting capacity; and the Spanish model which is based on large corporations operating mainly in regulated sectors and focusing their international efforts on South-America.

 

Without Catalonia, Spain could fully develop its economic strategy, CCN says, while also taking advantage of the infrastructures set up by the new independent Catalonia in order to internationalize its economy.

 

The fundamental thing for the CCN is that Spain, without Catalonia, will stop acting politically on economic matters (currently in constant conflict with Catalonia as a region) and concentrate on reactivating its own economy.

Further information:

Andreu Mas, 677 225 051.

A/e: amas@nautiluscomunicacio.com

Núria Roura, 673 436 937.

A/e: nuria.roura@nautiluscomunicacio.com

 

To contact the CCN: comunicacio@ccncat.cat

Cercle Català de Negocis website: www.ccncat.cat

CCN Twitter: @CCatalaNegocis

 

CCN sustains that Catalonia’s independence will have a positive feedback on Spanish economy