Only own goals in the Spain-Catalonia match


Everything about the independence challenge that grosses up in Catalonia seems disgraceful! That is a fundamental part of the problem, to be sure: an emotional chain reaction keeps shutting the real arguments.

On Thursday, rumours of the Spanish ministry of Finance allowing some relaxation over the deficit target–from 0.7 percent to 1.8 percent–for the already indebted region, were met with a loud “unbelievable!” by most observers sitting on the west side of the fence. On the east side, the word splitting the air was “outrageous!“, as the Catalan government will still have to find almost €2 billion in savings even if the new deficit-cap figure is implemented, and in spite of suffering a fiscal deficit over two percentage points higher than Greater London or four percentage points higher than any German länder.

In Madrid and Barcelona, authorities and their supporters could do worse than read the latest book “Nosotros, los mercados” (“We are the markets”) by Spanish hedge fund manager Daniel Lacalle, who works and lives in London. “More debt is never the solution,” warns Lacalle repeatedly in his long essay that has become the first best-selling financial ‘pamphlet’ in Spain since the crisis began.

Perhaps in Strasbourg, too, members of the European Parliament should get a few copies of Lacalle’s book. On April 16, the pan-European house agreed that the European Central Bank will apply the same low discount on regional debt than it does on sovereign debt when banks use it as collateral. In essence, lenders buying bonds from sub-sovereign governments will now receive more credit from the central bank. This will only tighten around the neck the public debt-weak balance sheet rope that is strangling entities in the eurozone.

Not surprisingly, according to Afi investment advisers in Madrid, the average cost of long and short-term credit for the Spanish government has fallen by at least five basis points. From Portugal to Slovenia, their state bonds are attracting investor attention on primary and secondary markets, Banco Santander has also reported. Have Europeans learnt any lessons at all after five years of credit crunch? Not many, apparently. Meanwhile, the Reinhart-Rogoff controversy muds the austerity debate with petty technicalities.

There is a mirroring effect in all these conflicts: Europeans appear unable to talk about the actual issues that trouble them.

The Generalitat–as the Catalan government is called–opened Wednesday its own parallel tax agency. The move has gained some critic eyeballs, in and outside Spain. The Times of London, for instance, published that same day a leading article about the risk of separatist wishes, but did so following the disquieting, affecting trail of an earlier column by former Conservative MP Matthew Parris, who wrote that “Catalonia is a bigger timebomb than Cyprus.” This is the Spanish papers’ language, too. And it is equally mistaken because, as it happens with the massive debt and humiliating waste and abuse of capital resources in most eurozone countries, it explains nothing while the fire still burns.

There is a democratic majority of Catalans unconvinced that the Spain project is right for them. There is a eurocrisis exit strategy that is failing. Somehow, to be successful, the answer to one proposition should serve the other.

About the Author

Victor Jimenez
London contributor at, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.

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