Spain – the Catalan carry-on

Pro-independence parties look set to win a majority in the regional Catalan parliament this weekend. This could open up protracted negotiations about independence that will spill over into December’s general election and raise doubts about national unity. Spain is already lagging in meeting fiscal targets. These forces of political fragmentation could mean even more fiscal failure. We would be short Spanish sovereign bonds. The Catalan story is also another reason for staying short the euro.

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