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The agency warns of the risk that Catalonia enters into recession

The rating alert that if the tension grows the Generalitat could delay the payment to its suppliers and pay its officials

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The agency warns of the risk that Catalonia enters into recession

"At present we do not expect political tensions between Catalonia and central government to lead to a downgrade of qualification, except possibly for Catalonia itself, because our working hyposis is that Catalan independence will not be produced." This is how Standard and Poor's (S P) rating agency has summarized its vision of political crisis that Spain lives. However, for Catalonia it did offer a more pessimistic perspective: "We believe that under an adverse political and economic situation Catalonia would almost certainly suffer greatest impact, possibly leading to a strong slowdown, and perhaps even "A recession."

S P warns that tension can end up passing bill for a drop in consumption, as have already noticed or agencies such as IMF or Bank of Spain. "We see a negative risk if re is a prolonged period of intense political tensions that could depress confidence of companies and consumers, causing a strong slowdown in Catalonia and potentially some business interruption in Spain, "he points. It adds that financial institutions and companies with a great exposure to Catalonia would be those that would be more directly affected, if regulatory and legal uncertainty continues to grow, according to this agency.

"The prospect of BBB qualification that has Kingdom of Spain remains positive, reflecting our expectation that foundations of Spanish economy will continue to strengn," he emphasizes.

In this scenario of recession in Catalonia, which agency does not see as probable, and of increasing tension between autonomous government and central could put "in question full and timely refinancing of short-term debt instruments of Catalonia or undermine E Efficiency of financial support of central government to Catalonia.

The agency continues to argue that if it reaches this point " Catalan administration could be forced to delay payments to contractors and perhaps even [salaries] to its own officials, jeopardizing certain public services." Such development could easily accelerate economic downturn and furr ignite political clashes. S P Closes this paragraph with a disturbing warning: "Such a scenario could easily accelerate recession and aggravate political shock."

A proof that this situation is not most likely to be handled by American agency is that "escalating political risk and social unrest in Catalonia has not led to S P Global Ratings to change ratings or perspectives of banks because "Our base scenario is that Catalonia will continue to be part of Spain." And y add: "We also believe that banks, particularly those with close ties to Catalonia, will be able to cope with immediate challenges arising from increase in political risks." For example, two banks originally domiciled in Catalonia, Banco de Sabadell and Caixabank, decided shortly after October 1 referendum to move to social headquarters outside of Catalonia to protect ir operations from a regulatory, legal and monetary environment "Potentially more uncertain."

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