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The Catalan Crisis in Spain

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.

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

Other News

Malta and Portugal have the best citizenship programmes

LighthouseWhen relocating to a new country, it’s good to know all your options so you can ensure you have the smoothest transition possible. For one thing, there’s the financial side to worry about.

This includes deciding on the best expat life insurance policy to buy as well as receiving expert pension transfer advice so that your retirement savings aren’t negatively affected by the move. 

Naturally, some nations offer a smoother residency transition, with Portuguese citizenship and Maltese citizenship among the best, according to research.

Understanding citizenship entry requirements

You will, of course, also need to be aware of the entry requirements for each country.

Several countries have systems in place with the goal of attracting expats who will be able to gain residency in return for an investment. In a post-Brexit world, these may be the best options for some overseas movers. Although not suitable for everyone, some of these systems are of a very high, reputable standard and hold a range of benefits for expats who are eligible. A recent survey has analysed which countries offer the best of these migration schemes, with people choosing to buy Malta citizenship and Portugal citizenship as a matter of priority.

What makes the best citizenship programmes?

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NEWS WRAP – Lost Pensions Worth £37 Billion

Woman searching for documentsMany British retirement savers could retire two years earlier than they realise, according to a new piece of research from pensions advice firm Profile Pensions*.

This, says the firm, is because one in four over 55s have lost track of their pension funds, a fact that helps to account for a significant proportion of the UK’s approximately 1.6 million unclaimed pension pots. It is estimated that these funds have a combined value of around £37 billion.

The situation is even worse for younger retirement savers, with three in ten 25-34 year-olds saying they have lost track of a pension. One in ten respondents were not sure whether they would be able to account for all their pensions.

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