The region of Catalonia will hold critical elections on December 21. The stakes are high: the region unilaterally declared its independence on October 1 and subsequently saw the rule of its regional government suspended by Madrid’s central government pursuant to Article 155 of the Spanish constitution.
The Catalan electorate is deeply polarized on the issue of regional independence, and the formation of a coalition after the vote will be additionally complicated by important differences of opinion along the more traditional left-right ideological spectrum.
1. A deeply polarized and fractured electorate is unlikely to deliver a conclusive result on the issue of independence;
2. Our current expectation is therefore continued political gridlock and new elections after failed attempts at coalition forming;
3. Catalonia’s economic prospects will continue to be profoundly affected and altered by the prolonged political uncertainty.