Catalonia: how will the EUR react
The Catalan Parliament will meet on Thursday, October 26 at 8.00 GMT to discuss the answer to Madrid and bring some light on the future plans of Catalonia after the independence referendum, which happened on October 1. The speech of the Catalan President Carles Puigdemont will have a serious impact on the Euro and European economy.
Depending on the Parliament’s decision, there can be 2 scenarios:
- If Catalan government refuses to step down and vote on a declaration of unilateral independence, the Euro is unlikely to grow.
- On the contrary, if the Catalan President Carles Puigdemont agrees to call the regional elections, the Euro will start rising up. In the same time, the latest polls show that that pro-independence parties would lose their absolute majority if elections were held now.
Why every trader should follow it:
Being a crucial part of the Spanish economy, Catalonia has been demanding more control over its own finance. Spain is going to lose 18% of the population and a quarter of the country's GDP.
Since August 2017 the unease among the Spanish investors started to rise due to the inevitable referendum issues. Strikes, public disobedience and walkouts could diminish a previously strong economic recovery. More than 1300 companies had to leave Catalonia already.
The Euro falls down against the Dollar immediately after the Referendum (October 1). The Standard and Poor’s rating agency confirmed that Spain will face a recession if the situation isn’t resolved in the nearest future. Therefore, the Euro can sink even lower.
How did it happen:
- Independent referendum was held on 1 October. 92.01% voted for “Catalonia to become an independent state in the form of a republic”.
- October 10 Puigdemont signed the Declaration of Independence, but its effects will be postponed for 2 months to leave a place for a discussion with Madrid. On the same day, the Euro rose high against the Dollar and the Yen.
- On Sunday, October 22 the Spanish Prime Minister Mariano Rajoy made the decision to implement the direct rule over Catalonia. That’s the main reason why the Catalan Parliament will be meeting this Thursday.