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Spain cuts growth forecast for 2018 due to Catalonia crisis

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Spain cuts growth forecast for 2018 due to Catalonia crisis

The Spanish government trimmed its 2018 forecast for economic growth to 2.3% from 2.6% because of the ongoing political crisis stemming from the independence vote in Catalonia, which represents a fifth of Spain's economic output, Agence France-Presse reported, citing a budget plan sent to the EU.

Prime Minister Mariano Rajoy's government believes that mounting uncertainty over Catalonia is endangering Spain's recovery from the financial crisis.

Catalan President Carles Puigdemont said Oct. 10 that the region had voted to secede from Spain but that it would suspend independence while it sought a dialogue. Rajoy gave the regional government until Oct. 16 to clarify whether it had declared independence. Instead, Puigdemont sent a letter to the prime minister proposing a two-month period of talks with Madrid.

Puigdemont now has until Oct. 19 to clarify whether he will drop his bid for secession or that no declaration of independence occurred. The Spanish government plans to implement Article 155 of the constitution to impose direct rule if Puigdemont does not respond.