Spain: Catalan parliament approves law for independence referendum – ING

The Catalan government has voted in favour of a law to formalise the independence referendum of 1 October and the Spanish government says the new law is illegal, explains Steven Trypsteen, Economist at ING.

Key Quotes

“Yesterday, the Catalan government published a bill to make the independence referendum official. After long debates, the Catalan parliament ratified the bill. The Catalan government has a majority in parliament (made up of the separatist Junts pel Si (Together for Yes) coalition and the left-wing CUP party). According to the bill, there is no minimum turnout requirement to make the result binding and the Catalan parliament will declare independence within 48 hours of a ‘yes’ vote.”

“During the day, Prime Minister Rajoy asked the Spanish constitutional court to cancel the bill when it is agreed. Prime Minister Rajoy did not make any statements after the vote. Nevertheless, last Monday the Prime Minister said the government would use all force to make sure the referendum would not be held. On 11 September, the Catalan national day, we can expect protests to take place.”

“While the organisation, let alone the outcome of the referendum, is still not a done deal, growing tensions between the Catalan and the Spanish government could cause some volatility on the bond market in coming weeks. The Spanish-German bond yield spread has already increased. That said, the strong growth of the Spanish economy should limit the potential spread widening.”