The referendum went ahead on 1st October despite being suspended by Spain’s Constitutional Court. The Spanish government tried to stop voting and hundreds of people were hurt in scuffles with police at polling stations. The Catalan authorities claim that just under 90% of voters backed independence – but turnout was only 43%.

However, the issue has an impact outside of politics, with the possibility of independence threatening to cause economic turmoil. Spain has had to slash its growth forecast for 2018, following the unofficial referendum, with Deputy Prime Minister Soraya Sáenz de Santamaría revealing that hotel reservations had plunged by up to 30 per cent as the crisis bit into the nation’s finances.

Speaking after a weekly cabinet meeting, she said, ”The events that we are experiencing in Catalonia make us more prudent. In fact, if there were no quick solution to this issue we should be forced to lower expectations of economic growth for the year 2018.”

The government expects Spain’s economy to grow by just 2.6 per cent next year, with Ms de Santamaría adding that there would be no “quick solution” to the crisis and this forecast would have to be lowered. Experts have warned that the conditions created by the Generalitat could plunge Catalonia into a deep recession. The dramatic financial warning came amid reports Spaniards were boycotting Catalan products, with sales of some items dropping by up to 70 per cent.

The unrest has already had major repercussions in terms of business; dozens of companies have already moved their legal headquarters from Catalonia, further cementing rising concerns that growth in the region could take a hit, and, by extension, to that of Spain as a whole. Banco Sabadell, the country’s fourth largest bank, has already announced it will move out of the region to Alicante over fears for its future.  CaixaBank, another large bank has also decided to move its registered office to Mallorca in light of the situation in Catalonia.

With Santander also recently buying the struggling Banco Popular for one Euro, some would question the wisdom of holding too much capital in the Spanish Banking system.  For long term savings, expats have the option to hold funds outside of Spain.  However, with new ISAs not available to Spanish Residents an International Bond would provide a suitable alternative whilst also providing Tax efficiency.