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Elections in the northeastern Spanish region of Catalonia resulted in a majority for pro-independence parties: 72 out of 135 seats are in the hands of parties that clearly support secession from Spain.

However,  this is not a one way street and this conflict is here to stay for quite some time.

The pro-independence parties labelled these elections as a de-facto referendum, as the central government in Madrid denied them of such a move. And, in terms of seats in parliament, this was achieved.

Not so fast towards independence

However, the mainstream wide coalition of parties, Junts pel Si (Together for Yes) including both pro-independence right and left parties as well as notable figures in the Catalan civil society did not win a majority on its own.

They obtained 62 seats. The other pro-independence party is not exactly a natural partner:  the CUP party is not only pro-independence but also radical left, anti-capitalist, and that doesn’t really go well with the right wing policies enacted by the current Catalan president Artur Mas.

So what kind of government will Catalonia have? Will it push quickly for a declaration of independence?

There is also another question regarding a secession: counting the votes, the pro-independence parties gained only 48% support, as several parties did not pass the threshold to enter parliament.

What’s next?

Yet if a majority for independence is in doubt, there is no doubt that Catalans want to determine their own future.  Counting the  seats and the votes, there is a landslide victory for parties who want a referendum .

This was known in the previous election in 2012 and also  according to opinion polls, and now received another boost.

How long can Spain ignore these aspirations? The current center-right government  rejects any such referendum and the ruling PP party has an absolute majority in parliament. However, its days are numbered.

Spain goes to the polls in November or December and the new government might go ahead and allow a referendum. This might cause the winning parties in Catalonia to wait a bit longer with moving forward to an outright secession.

Impact on the euro

EUR/USD opened the week lower, trading at 1.1170 at the time of writing, but it is hard to tie the move  the events in Barcelona. The outcome was very similar to the opinion polls and an immediate move seems off the table at the moment.

However, as with Greece, this conflict continues brewing and  should be watched. And contrary to Greece, Catalonia is a rich region. If the separation from Spain is done without full cooperation, Catalonia leaves the euro-zone, and such a “Cataleave” not only breaks the irreversibility  of the euro, but also takes a rich industrial region out of the game.

We will continue covering the important events towards the next clash.

The preview:  Catalonia’s elections could result in fresh risk for the euro-zone