Why Catalonia crisis should not trigger a market risk-off

What is your reading of recent evolution of Catalonia crisis? Do you see a Catalonia secession a true possibility going forward and what could be the implications?

Tristan Perrier: We continue to firmly believe that Catalan independence will not happen. There are multiple reasons to believe this. In the first place the Spanish central government and most Spanish political parties remain categorically opposed. The second reason is that the Catalan pro-independence government does not have the practical means to impose the secession. In addition to these, pro-independence supporters in Catalonia fall short of an outright majority of the population and finally there is little scope for the Catalan pro-independence camp to gather any significant external support (EMU countries and institutions stand firmly behind the Spanish government). Moreover, the recent announcements by a number of large companies that they would or could leave Catalonia has also shown that independence would probably cause a major economic shock. However, if we were wrong and Catalonia became independent, the implications for the rest of Western Europe would be massive (as it would have created a precedent for other pro-secession movements in countries like Belgium, the UK and even Italy and France).

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