Spain's next threat: Losing 20% of its economy

Catalonia, Spain's next threat: Losing 20% of its economy

http://edition.cnn.com/2012/10/12/business/catalonia-independence-spain/index.html?hpt=hp_c1

By Oliver Joy, CNN

November 25, 2012 -- Updated 0942 GMT (1742 HKT)

Medical workers demonstrate in Madrid against the Spanish government's latest austerity measures to deal with Spain's crippling debt.

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Spain in crisis

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STORY HIGHLIGHTS

• Catalans go to the polls on Sunday November 25 in a vote that trigger a referendum for independence
• Catalonia is home to tourist attractions -- Barcelona Football Club and the Gaudi House Museum
• The CiU is raising the debate on sovereignty at a time of public frustration over taxes in Catalonia

London (CNN) -- It's September 11, 2012. The National Day of Catalonia. And an estimated two million people are on the streets of Barcelona waving banners "Catalonia -- The next state in Europe" and "Independencia."

Separatist Catalans are calling for sovereignty from Madrid and the rule of the conservative Popular Party, led by Prime Minister Mariano Rajoy.

Losing 20% of the economy is the last thing the Spanish government needs right now. But if those calling for independence get their way, that could be exactly what happens when Catalans go to the polls this weekend.

Catalonia -- a region in the northeast of Spain and home to global brands and tourist attractions including Barcelona Football Club and the Gaudi House Museum -- represents one fifth of the Spanish economy.

The Catalan independence question comes at an inconvenient time for Rajoy's government. Spain, part of the eurozone mainstay, is grappling with unsustainable borrowing costs and a soaring public deficit while trying to placate public anger over a lack of jobs and stringent austerity.

Out of the hardship, regional disputes in northern Spain have started to resurface, particularly in Catalonia. Economists at Deutsche Bank say the political turmoil in such a prosperous region could be the catalyst that forces the Spanish central government into seeking aid from Europe's permanent bailout fund, the European Stability Mechanism.

As the industrial heartbeat of the eurozone's fourth largest economy, Catalonia is the most affluent region in Spain. Situated on the Mediterranean and bordering France, the area is home to seven million people and made up of four provinces: Barcelona, Lleida, Tarragona and Girona.