The Economy of Catalonia

2005 2006 2007 2008 2009 2010
Estimate based on monetary flow
Actual fiscal flows (no «neutralisation») –9.8% –10.3% –10.7 % –5.7 % –0.4 % –3.0 %
“Neutralised” fiscal flows 1
Using total expenditure –8.3% –7.9% –8.1 % –8.5 % –8.4 % –8.5 %
Using total revenue –8.8% –8.6% –8.9 % –8.4 % –6.3 % –7.0 %
Estimate based on benefit flow
Actual fiscal flows (no «neutralisation») –7.4% –8.0% –8.2 % –3.2 % 2.1 % –0.4 %
“Neutralised” fiscal flows 1
Using total expenditure –6.0% –5.6% –5.6 % –5.9 % –5.8 % –5.8 %
Using total revenue –6.3% –6.1% –6.2 % –5.3 % –4.3 % –4.8 %
1. «As if» the Spanish government budget were balanced.
Source: Author’s calculations based on data from Ministerio de Economía y Hacienda (2008) and Departament
d’Economia i Coneixement (2013).
Table 1. Net fiscal flows between Catalonia and the rest of Spain
(% of Catalonia’s GDP)
the Spanish government deficit is not «neutralised». However, that year
the deficit was very high and so the results vary greatly when they are
«neutralised»: the fiscal deficit becomes 8.5% of GDP (cash-flow approach)
or 5.8% (benefit approach) if we use the total expenditure, and
7.0% (cash-flow approach) or 4.8% (benefit approach) if we use total
revenue.
So far we have presented the results. The estimates are relatively robust
and the methodology – and even the data – are not really in dispute. The
problems arise when we try to interpret these data and choose the most
«valid» method. Which approach is better: cash-flow or benefit approach?
Should the Spanish government budget be “neutralised” or not?
And if it is, which total should be used: expenditure or revenue?
The answer to all these questions should certainly be that it depends on
what is being analysed. But here we are talking about the potential benefits
of Catalonia’s secession, which is a sensitive point on which it is
very hard to avoid interference from other factors. So, for those who are
against independence, Catalonia’s fiscal deficit is unquestionably a mere
0.4% of GDP (benefit approach, without neutralising), while for those in
favour of independence, the only valid figure is 8.5% (“neutralised”
cash-flow approach, using total expenditure). This explains the figure of
38 Economia de Catalunya