Could Catalonian independence make other regions follow suit?
Regional elections in Spain begin on tomorrow and they are a cause for worry for Brussels. The election is expected to be close between anti and pro independence parties. It would be surprising if any of the seven parties involved in the election were to win majority victory. Historically, political uncertainty weakens the currency in question, so a close fort race in the election has the possibility to create euro weakness.
Catalans have a difficult decision to make. Their decision to stick with a unstable separatist coalition whose leaders have been placed in jail or who have fled the country, or take a gamble on alternative parties that fall in line with Spanish Prime Minister, Mariano Rajoy’s wishes for a unified Spain.
Some polls suggest a lead for Catalonian secessionists who have used a recent tight victory in the last regional parliament to declare independence and cause a clash over sovereignty that have caused worry far beyond Spanish borders. The result could have been warped however as only half the electorate voted.
Catalonia makes up a large section of GDP in Spain, but the real threat is that other areas in the EU follow suit if independence for Catalonia occurs. The possibility of a domino effect has the potential to cause substantial Euro weakness.
If you are selling euros it may be wise to take advantage of current levels to avoid the risk of a fall in value on Thursday and Friday.
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