Policy Article

The importance of Catalonia for the Spanish economy (original publication in German)

Kiel Policy Briefs, 108

The political conflict over the legal status of Catalonia fuels concerns about the future economic development in Spain which returned on a path of economic recovery in the aftermath of the financial and economic crisis. In their Kiel Policy Brief the IfW economists Klaus Schrader and Claus-Friedrich Laaser explain that together with other economically strong Spanish regions Catalonia contributed to the recovery of the Spanish economy. The analysis also reveals, however, that Catalonia is not dominating Spain’s economic structures, and like other Spanish regions Catalonia is still facing severe economic problems, especially on the labour market. Moreover, its export-intensive, highly industrialized economy benefits from the close business ties with other Spanish regions and from the unrestricted access to the EU Internal Market which would be at stake in case of an unilateral declaration of independency. To achieve a balance of interests between the Spanish regions and the central government by a joint effort it is proposed to reform Spain’s federal structures on the basis of principles derived from fiscal federalism.