If the last few weeks in Madrid have been messy, Catalonia is in the midst of a political hurricane.
Following the unilateral referendum on October 1st—where 90% of a 43% turnout voted for independence—we’ve seen protests, counter-protests, broken ballot boxes, and policemen with batons plastered across international news.
Now, it seems everything is on hold. Catalan leader, Carles Puigdemont, expected in some quarters to declare Catalonia independent from Spain, has suspended an official declaration of independence for more talks with the Spanish government in Madrid. The political and economic future is uncertain.
What could the business implications of Catalan independence be?
Enrique Dans, professor of innovation at IE Business School in Madrid, thinks Catalan independence could trigger a talent drain from the region.
“The main concern is that any investor gets scared off when there’s instability,” he says. “And everything indicates that the situation of Catalonia as an independent country would be difficult—a small country, in the middle of Europe, but outside the EU, would be very isolated.
“The other part is the language,” Enrique continues. “Most of daily life in Catalonia happens in Catalan. And, right now, in Barcelona, there’s a growing feeling of tourism-phobia—people hating the touristic model the city has championed so far.
“If the place becomes an independent country, Spanish would be a language that nobody would want to use. It becomes a much more difficult value proposition to attract or retain talent.”
Polls show a region divided. Hundreds of thousands of people took to Barcelona’s streets in an anti-independence rally a week following the referendum.
But while the independence movement is driving public opinion with a media-savvy campaign, the Spanish government hits back with batons.
First, small protests against tourists and Airbnb. Then, a long-standing independence movement coming again to the fore. Enrique doesn’t think independence is unrealistic.
“It’s a state from the 21st century—Catalonia—versus a Spanish government that plays the same politics of, not even the 20th century, but the 19th century,” he says.
“It’s weird. I travel to Barcelona very often and I’ve never seen any problems or hostility there—no one has ever refused to speak to me in Spanish. However, the problem of becoming independent has been so poorly managed on both sides that it seems almost unsolvable.
“Right now, there’s a growing feeling that the Catalan people want to decide their own destiny, and anything that the Spanish government tries to do will probably make it worse.”
While politicians debate, banks are leaving Barcelona. Both CaixaBank, which accounts for half of Catalonia’s banking sector, and Catalan bank Sabadell have relocated their legal HQs outside the region.
“Catalonia is a rich region,” Enrique continues. “They pay more in taxes than the amount of money they receive from Spain. Outside Spain, they could manage to grow and become a prosperous economy.
“The problem is, this is not easy. Most of the growth they sustain is due to commerce with Spain, and probably what would happen in Spain—as has been happening in the last few years—is a rejection of business with Catalonia.”
Isolation and instability are the buzzwords here. If Catalonia becomes independent, it will separate from the European Union. Joining the EU would take time.
There are countries—Iceland, Norway, Switzerland for example—inside the free movement Schengen Agreement but outside the EU. Still, ‘special relationships’ are dealt with grudgingly in Brussels.
How would an independent Catalonia, outside the EU, impact business schools in Barcelona?
MBA students are divided. Pau Serrat Aguilar, a native Catalan who attended a top-ranked Barcelona-based school, doesn’t think an independent Catalonia would make business schools in Barcelona less attractive.
“From what I remember from my batch, most of my MBA colleagues came to the school because of the city itself,” he says.
“To be honest, I don’t think the effects of independence would be that significant. I think the most likely scenario is that if there was independence nothing would happen.
“Of course, we have to think about what other governments do,” he admits. “If we start seeing tanks and soldiers on Catalan roads, then things would be different.”
John Adam Roberts, a Canadian who studied an MBA in Barcelona and is now starting his own fintech firm in Madrid, is concerned. He met his wife during his MBA. That aside, if he was looking at business schools now, he wouldn’t be looking at Barcelona.
“I would definitely not be applying to a potential independent that does not have links to the EU,” John explains. “A huge part of what you’re paying for with business school is the network, and that network doesn’t have a huge amount of power if it hampers your ability to go elsewhere in Europe.
“Some of the best MBA programs are attached to schools with names,” he continues. “If Massachusetts decided to break off from the US tomorrow, you would still have people going to MIT and Harvard. But the reality of the larger market of Europe is important.
“If Catalonia goes independent, you’ll probably see Spanish schools like IESE leave.”
For Enrique, what could be a challenge for business schools in Barcelona, is an opportunity for schools in Madrid. He thinks the potential talent drain in business will extend to business schools as well.
“We’re witnessing it already,” he says. “The fact that IE Business School is attracting a lot of international students is partially related to the fact that IE, right now, represents a better value proposition than business schools in Barcelona.”