The prospect of Catalonia declaring independence from Spain has sparked fears that major businesses will have to relocate away from the region to guarantee continued access to the domestic Spanish market and the wider European Union.
Catalonia-based banks Sabadell and CaixaBank are expected to be among the first to respond. Their share prices have fallen sharply this week amid mounting concern about how they would operate if no longer based in Spain or the EU.
Sabadell, which owns TSB, held an emergency board meeting on Thursday. Afterwards it said it would be moving its registered office to Alicante. CaixaBank was also said to be considering plans to move its domicile away from Barcelona.
In a similar waythe Brexit vote led to warnings about the future of international companies in the UK, concerns were raised about the implications of independence for a wide range of businesses in Catalonia and rest of Spain as the region is the largest contributor to Spanish GDP.
Juan Roig, the chairman of Spain’s biggest food retailer Mercadona, told Reuters: “As a businessman, as a Spaniard and as a person, I am very worried and I am scared by what’s going on [in Catalonia].”
Christopher Dottie, the president of the British Chamber of Commerce in Spain, said he would not be surprised that those companies that have their main offices in Catalonia may be considering moving to other parts of Spain where there was “more stability and less risk”.
The German carmaker Volkswagen has a Seat plant near Barcelona making 2,000 cars a day. IAG, the parent company of British Airways, owns two airlines in the region – Vueling and new low-cost carrier Level. Nestle, Italian carmaker Ferrari and Dutch paint firm Akzo Nobel also operate in the region.
Steven Trypsteen, a Brussels-based economist for Dutch bank ING, said he was sceptical that independence would take place because of the powers held by the government in Madrid, but he acknowledged the uncertainty was unnerving for businesses.
“These international companies do not like uncertainty and if they have to choose between Catalonia and the EU they may chose the EU,” said Trypsteen.
A spokeswoman for Seat said it was too early to make a full assessment, but added that it needed a stable political environment that allowed it to invest to generate growth and jobs. She said the carmaker was “closely monitoring how the current situation is evolving”.
While businesses have been making preparations in the face of a rise in the Catalan independence movement for years, experts believe they may now start to activate those plans after the events last weekend when more than 900 people were injured when Spanish police attempted to halt the independence referendum which had been declared illegal by the courts and by the Spanish prime minister, Mariano Rajoy.
The Madrid stock market has been rattled and volatile. It recorded its biggest fall since the Brexit vote on Wednesdayand then recovered much of the lost ground on Thursday when Spain’s constitutional court suspended a Catalan parliament session planned for next Monday. The Catalan president, Carles Puigdemont, had been expected to declare independence during the session.
Some businesses, such as telecoms company Eurona and biotech firm Oryzon Genomics, have already announced plans to move their offices to other parts of Spain, leading to sharp rises in their share prices. However, neither company linked the moves to the political upheaval in Catalonia.
Bank shares, pummelled since the weekend, also rose on Thursday after Sabadell announced its board was considering its options.
CaixaBank, which is Spain’s third largest bank, said: “The necessary decisions will be taken, in due course, always with the objective of protecting the interests of our customers, shareholders and employees at all times.”
Raj Badiani, an economist at IHS Global Insight, said the problems faced by businesses were similar to those in the UK grappling with the repercussions of Brexit and whether they would have access to the EU. Catalonia has said it would remain in the EU and the single market but is likely to have to reapply for membership, which could take years.
“It’s the same problem as with Brexit. International companies don’t know what sort of access they will have. The uncertainty about market access will weigh down on business confidence and investment intentions,” said Badiani.
“The risk of Catalan independence and the strong likelihood that it would have to apply for European Union membership is a headache, with many companies based in Catalonia fearing the potential loss of free-market access to the rest of Spain and the EU region.”
Catalonia’s economic strength adds fuel the campaign for independence. It is a magnet for international investment, with 7,086 foreign companies based in the region, representing 18% of employment and 29% of turnover. The ratings agency Standard & Poor’s has warned it could downgrade Catalonia if the political tensions escalated.
The Catalan business lobby group Círculo d‘Economia is among those to express alarm about the prospect of independence. “Such a declaration would plunge the country into an extraordinarily complex situation with unknown, but very serious consequences,” it said.
The constitutional crisis has deepened just as S&P said it could upgrade Spain’s credit rating in the next 18 months because of the growth in the economy, which has expanded 3.2% over the past two years. Badiani does not expect an immediate hit to GDP but warned the crisis was a “risk to the heartbeat of Spain’s steady recovery”.