This post comes from the perspective of Dave Darsch.
These are complex times. Just a few months ago, Scotland was in economic turmoil, until they chose a certain future by deciding to remain in the U.K. As a Barcelona resident, I see now it's Spain's turn to face political and economic volatility. The autonomous region of Catalonia held a (non-legal) referendum on 1 October, on whether to become independent from Spain, and the situation remains unresolved. Now uncertainty dominates the decision-making processes of all businesses that could feel the impact.
Catalonia is an important business space in Spain and throughout the world. It creates 20% of Spain's GDP. Its capital, Barcelona, boasts a thriving tourist industry and is a hub for manufacturing, gaming and telco, hosting the world's largest gathering for the mobile sector - Mobile World Congress - every year. Platforms like Barcelona Global have worked to make the Catalan capital a major world player for talent and economic activity. To navigate these unpredictable times, Catalonia will need to develop powerful strategies for economic resilience. This depends on gaining a clear understanding of how uncertainty impacts different parts of the business ecosystem.
1. Spending risks
There are many variables and different forces at play to accurately predict how Catalonia will handle these large-scale changes. The human reaction to change is discomfort - and discomfort creates fear. Uncertainty is always bad news for business spending, at least temporarily. In this limbo stage, with no idea what is in store, Catalan businesses may cut down on spending, begin precautionary saving and be less willing to take risks, with a negative impact on the business environment. Polls show that 62% of Catalonia residents are worried about the future, while 32% are excited. To find a way through the discomfort of change, Catalonia will need strong leaders in companies, ready to listen, learn and negotiate clear strategies to create the "positive mood" in which business thrives.
2. Travel hesitation
Tourists looking to relax will often rule out destinations with any hint of instability. Three out of four Catalan hoteliers felt that the push for independence might hurt their business. And certainly, some reports show a drop in tourism rates of up to 15% compared with last year's figures. It's important to remember that it's early days, though. The drop is in the couple of weeks immediately following the referendum, the aftershock of the images of conflict that dominated the international press. Catalonia's beautiful coast, great weather and culture of food and art might be enough to keep attracting tourists throughout this volatile period. However, this uncertain atmosphere must be managed, so that tourists feel secure that the volatile situation will not affect their stay.
3. International uncertainty
Barcelona is a global city. Catalonia needs to maintain strong international connections to maintain its core industries through this turbulent time. The Catalan start-up scene is particularly international, even internally with a high number of start-up founders (14%) and start-up employees (23%) from other countries. Combined with significant global trade links, this means that international access is crucial for Catalonia. The current situation has generated uncertainty around Catalonia's future place in the EU, and whether residential visas or trade tariffs will affect business. When Brexit happened, there was an impact on both existing and new businesses. Now that it's Catalonia's turn, global trade insecurities could create strong economic discomfort, unless a clear path forward with agreed international alliances can be found, whatever the political outcome.
4. Fiscal complexity
Uncertainty creates a negative atmosphere, which companies want to dissociate themselves from. Many major IBEX companies previously stationed in Catalonia have relocated their headquarters to other parts, including Banco Sabadell, Caixabank, and Cellnex. This could be a blow for Catalonia that exacerbates the mood of ambiguity. Still, these companies have retained their work-forces and operations in Catalonia, suggesting these moves may be at least partly symbolic. Times of big change generate anxiety and also opportunities. Catalonia has always been an entrepreneurial culture that promotes international trade and business-friendly fiscal policies. The President of the American Enterprise Institute sees the situation as a chance for the region to create a unique identity as "an example of free enterprise", whether Catalonia remains part of Spain or not. But mood is everything in business. What is really harming enterprise in Catalonia is uncertainty. Whichever political solution is found must take the economic effects of uncertainty seriously, and create a secure base from which to reinvigorate Catalan business.