Spain: All the limelight on regional elections in Catalonia - Rabobank

In view of analysts at Rabobank, today’s regional elections in Catalonia will be the dessert of an already very eventful year as yesterday the IBEX 35 was already one of the continent’s worst performing indices, most likely due to some Catalan vertigo, but today the Catalans will go to the ballot box to vote for a new regional government.

Key Quotes

“After firing the rebellion regional government in October, Spain’s Prime Minister Rajoy called new regional elections to restore democracy as soon as possible. Conveniently, this short window made it difficult for separatist parties to reorganise and to run on a joint list. This may cost the separatists votes yet polls show that it’s too close to call whether they will also lose their absolute majority.”

“Exit polls will come in at 8PM, a separatist-led minority government seems the most likely outcome. Based on an average of last week’s polls, the three pro-independence parties (ERC, CUP and JuntsxCat) poll at 67 or 68 seats collectively out of the 135 seats in the regional parliament. The unionists are expected to rake in around 58 or 59 seats. Even when the separatists do secure an absolute majority a renewed push for unilateral independence remains unlikely, at least in the coming years. The national government has already forcefully demonstrated that it doesn’t allow Catalonia to take make unilateral decisions on independence, finding comfort in the backing of the international community. However, prolonged uncertainty may damp confidence in Spain’s growth prospects. Conversely, when the separatists fail to secure such a majority and the issue of independence will be put on the back burner, there is scope for a small relief rally in Spanish assets.”