The outcome of yesterday’s regional elections in Catalonia reflects the electorate’s deep polarization on the issue of regional independence.

The elections were called by the central government after the region unilaterally declared its independence on October 1, and subsequently saw its self-government suspended by the central government per Article 155 of the Spanish constitution. The three parties supporting independence together gained a small majority of seventy seats in the 135-seat parliament, and we expect them to form a governing coalition. It is worth nothing that the Ciutadans party, which strongly opposes independence, became the largest party in the region with thirty-seven seats in the parliament. While a pro-independence coalition will claim a renewed mandate for independence, we do not expect the central government in Madrid to change its stance towards the independence movement in any meaningful way.

With several political leaders on the pro-independence side still in prison or exiled in Belgium, the timeline of coalition negotiations and any engagement with Madrid or other moves made in the pursuit of independence is uncertain at best. We note that forming a coalition may additionally be complicated by differences of opinion along the more traditional left-right ideological spectrum. Thus, the situation remains uncertain, and negative economic repercussions are likely to persist. Since October 1, over three thousand companies in the region have relocated their headquarters to elsewhere in Spain. Foreign investment in the region saw a sharp decline in the third quarter of 2017.

Catalan parliament dec 21 results

The regional parliament has 135 seats, so sixty-eight seats are required for a coalition to benefit from the support of an absolute majority. In yesterday’s vote, parties supporting independence reached a total of seventy seats as follows: Junts per Catalunya (thirty-four), ERC (thirty-two), and the CUP (four). The parties opposing regional independence combined for fifty-seven seats: Ciutadans (thirty-seven), the PSC (seventeen), and the Partit Popular (three). The CeC-Podem party, which is not aligned on the topic, achieved eight seats.

When elections were last held in 2015, independentist parties obtained a majority of seventy-two seats, with sixty-two seats for the coalition of ERC and Junts per Catalunya (now competing separately), and ten seats for the CUP. As with yesterday’s poll, Ciutadans emerged as the leading opposition party, with twenty-five seats, followed by PSC (sixteen), CeC-Podem (eleven), and Partit Popular (eleven).

Given this outcome and the depth of social and political division on the topic of independence, we do not expect that the coalition formed will be a stable and durable regional government. The outcome does also not seem to make the formation of any other coalition feasible given how entrenched positions on independence now are. The narrow mandate that pro-independence parties were handed yesterday will not inspire the government in Madrid to change its overall approach towards developments in the region. This implies a continued standoff between the regional and national governments and eventually lead another regional election.

All in all, after yesterday’s outcome the region continues its course of political and economic uncertainty and upheaval. The impact on regional growth and employment prospects is broadly negative as the uncertainty is affecting investment decisions, and may well alter the structure of the economy and its prospects for a long time to come.

Related Experts: Ole Moehr