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Eurozone: Markets focus on Catalonia elections on Sunday - Deutsche Bank

FXStreet (Delhi) – Research Team at Deutsche Bank, note that the event which will be worth keeping an eye on this Sunday will be the election in Catalonia.

Key Quotes

“The recent polls have suggested pro-independence Junts pel Si and CUP are set to win the majority of seats and are creeping close to the majority of votes as well. Junts pel Si has argued that an absolute majority would be sufficient to declare victory in the de-factor referendum for independence regardless of the share of votes in any case. It pledges to declare unilaterally the independence of Catalonia in about 18 months unless the central government allows a binding referendum on independence.”

“However, what makes this more difficult is that any changing in the Constitution to allow Catalonia’s independence appears to be an extremely demanding scenario from both a legal and political perspective.”

“The team also think that from an economic and financial perspective, a unilateral declaration of independence by Catalonia would likely be a lose-lose outcome for both Catalonia and Spain.”

“There is also the risk that the election will leave a deeply divided Catalonia and deep division between Catalonia and the central government, so a negative outcome can’t be ruled out. Marco and Abhishek ultimately believe that a compromise in 2016 seems the most reasonable scenario, but it won’t be easy.”

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