Ximo Puig, the president of the government of Valencia, a province in eastern Spain, says the Catalonian secession crisis is creating short-term opportunities for his region, as companies headquartered in Barcelona move parts of their operations to Valencia.
Since the informal referendum regarding Catalonian independence took place on October 1, CaixaBank, Spain’s third largest bank, has transferred its legal base to the city of Valencia and BancoSabadell, the country’s fifth largest lender, has moved its to Alicante, one of the main port cities in the Valencia region.
Idilia Foods – a food producer that makes brands including Cola Cao, Nocilla, Paladin and Okey – has joined the exodus to Valencia. BancoMediolanum, a subsidiary of Bancario Mediolanum, an Italian banking group, has also made the move.
Catalonia is home to more than 8000 multinational and foreign companies, and many are reconsidering their legal status following the referendum and look set to shift to Valencia. They are concerned that they will not have easy access to EU markets if Catalonia succeeds in gaining independence.
“What is happening in Catalonia has benefited the Valencia region in the short term,” says Mr Puig. “Our region directly borders Catalonia and so we have seen all these companies transfer their headquarters. Furthermore, in most cases, we believe these shifts will be permanent. However, the crisis is not good for the image of Spain generally and could well affect investors’ attitudes towards the country.”
The transfers are not yet seeing new jobs created in the Valencia region but, if the Catalonian crisis continues, the companies could well start to invest greater sums in Valencia and gradually shift their operations from Catalonia to the region.
Valencia was one of the parts of Spain that suffered the most in the years following the global financial crisis of 2008. A huge property boom had been under way and when this went bust it took most of the local savings institutions with it. Valencia’s unemployment rate shot up to 30% but is now down to 18.6% and the local economy – which accounts for almost 10% of Spain's GDP – is expected to expand by 3.2% in 2017, the fifth consecutive year of growth north of 3%.
However, the region’s government has had to become a lot more indebted since the global financial crisis and almost one-quarter of the government’s annual €4bn budget is used to service the vast debt pile.
A positive for the region, however, is that between January and August 2017, Valencia received more than 6 million tourists, a 5% increase on the same period in 2016.
“Tourism has become incredibly important for Valencia,” says Mr Puig. “The UK is one of our main markets. My government has revised the region’s economic model, and tourism and the digital economy now lie at its heart. I think this will result in faster economic growth in the long term.”
The city of Valencia is home to the City of Arts and Sciences, a €1.3bn complex that includes an opera house, museum and Europe’s largest oceanographic aquarium. It is one of Spain’s biggest tourist attractions, and shows the region's commitment to finding new ways to draw in both domestic and foreign visitors.