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Spain Flash Forecast

Secession Crisis Will Test Rajoy’s Political Skills
Spain has been thrust into a major political crisis following an illegal referendum on independence held in Catalonia on October 1, in which an overwhelming majority of the roughly one-half of the electorate that bothered to cast a ballot opted for secession.  Prime Minister Mariano Rajoy failed in his effort to persuade the regional government to cancel the referendum, and the widespread violence triggered by a heavy-handed attempt by security forces to disrupt the vote has only stiffened the resolve of Catalonia’s regional president, Carles Puigdemont, to proceed toward a formal declaration of independence.
Rajoy’s response will significantly influence both the duration and intensity of the crisis, which has the potential to negatively affect the stability of his minority government and undermine an economic recovery that is already expected to lose a little steam in 2017.  In a worst-case scenario, the prime minister might…
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