The Minister for Energy, Tourism and Digital Agenda Álvaro Nadal said “the impact of the political situation in Catalonia is greater than the impact of the terror attacks.”
Spain’s tourism industry has been hit by a series of protests against visitors to the country and its islands this summer as well as the Barcelona terror attack.
Mr Nadal, speaking to Radio Nacional (RNE), said the worsening political situation in Catalan “may be marking a greater setback than expected in the tourism sector”, especially in national tourism because Spanish citizens “are very aware of the news.”
He indicated the terror attack in August had – for the moment – less of an impact on tourism and the economy in general than Catalonia.
But he admitted the economic impact on the region was hard to assess fully as the situation was “so crazy that it cannot be assessed”.
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Mr Nadal said should Catalonia become independent it would no longer have currency, cashpoints would stop working, banks would not have liquidity, trade relations would be “suspended”, there would be 100 per cent tariffs and a passport and customs check would be required at all borders.
He warned there would be an impact on the eurozone and the single currency itself and said Catalonia would be plunged into “electric chaos” since the system is “totally integrated” right across Spain.
Mr Nadal’s comments echo recent concerns by businesses in Catalonia regarding the region’s political instability saying it could deter investment.
Catalonia is one of the Spain’s richest regions with an economy the size of Portugal but that could be put into jeopardy should the region declare independence within 48 hours of a Yes vote being declared on Sunday – in defiance of the Spanish courts ruling the referendum illegal.
Borja García-Nieto, the chief executive of local private equity group Riva y García said: “Decisions are not being taken and investments are already being postponed.
“This is already bad for the economy, and the problems are potentially just starting.”
Mr García-Nieto said some of his wealthier clients were also preparing to move if Catalonia became independent.
US companies, including Procter & Gamble and DowDuPont, are among the largest foreign investors in Spain and have operations in Catalonia. European companies such as Volkswagen, Nissan and Nestlé also operate in the region.
Spain’s finance minister Luis de Guindos recently told the Financial Times that breaking away from Spain could lead to a 30 per cent fall in the region’s gross domestic product since Catalonia would be outside the EU and the eurozone.
(Additional reporting by Maria Ortega).