"The eurozone crisis is partly to blame. It has mercilessly exposed the fragility of Spain’s fiscal arrangements. In this case, the relatively rich Catalans are outraged that they have to contribute up to 9 per cent of annual economic output to the central pot in Madrid, but then go cap-in-hand for a bailout to meet their debt and payroll commitments. Catalonia wants fiscal autonomy: the right to collect its own taxes like the Basques, who contribute proportionally much less to Spanish coffers.
Yet Spain, where prime minister Mariano Rajoy is agonising over whether to seek a full eurozone bailout, needs Catalan fiscal transfers to meets its pensions and welfare liabilities. Mr Rajoy’s rightwing Partido Popular government, which is ideologically hostile to devolution, is trying to use the crisis to recentralise Spain, creating a dangerous cocktail of fiscal penury and national grievance." [Financial Times]
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