Catalan elections: the PSC wins

On 12 May 2024 elections to the Parliament of Catalonia were held. Salvador Illa’s PSC came first and the pro-independence parties lost their majority for the first time in decades. The result opened a new political cycle, although forming the government would still require negotiation and time. A change of this kind does not turn into rules or decisions overnight, and it is worth distinguishing between the electoral result and its practical effects.

Elections are a political matter and it is not for an advisory firm to judge the parties. What does interest companies and families is understanding how the institutional context shapes economic decisions: where investment goes, which rules apply, which infrastructure is prioritised and how much stability there is to plan several years ahead. That is the angle of this note: not political judgement, but what companies can draw from the new context.

The result

With Salvador Illa’s PSC the most-voted force, the pro-independence parties lost the majority they had held for years. It was a change of political cycle in Catalonia, with consequences for the priorities of the future government, its parliamentary alliances and the tone of its relationship with the institutions of the State. Each of those variables has indirect economic effects, from the timetable of public investment to the climate of confidence.

The formation of the new government would still have to wait. In a fragmented Parliament, forming a government requires pacts, investiture votes and legal deadlines, and during that time major decisions are left in suspense. It is normal to have a transition period in which institutional activity moves more slowly than in an established legislature. For companies, the practical consequence is that the public decisions they were waiting for may take somewhat longer.

The business reading

Catalan business welcomed the result as an opportunity for stability. For investment, institutional predictability is as important as incentives: a company decides on investments several years ahead and needs to trust that the rules of the game will not change abruptly. When that confidence is missing, companies tend to postpone projects or to demand a higher return to compensate for the risk.

That predictability shapes very specific decisions: building a new plant, hiring a team, opening an office or keeping the tax and registered address in a territory. Investors, local and foreign, compare where they can count on clear and lasting conditions, and lower political tension is usually an argument for staying and growing. But no business decision is taken on a single factor: the market, talent, costs and demand weigh as much or more.

What to keep an eye on

With a new political cycle, it is worth following decisions in areas that directly affect activity, such as regional taxation, infrastructure or utilities. Measures announced during a campaign do not always become rules, and those that do may take time to apply, so the useful course is to wait and see what is published and on what timetable. The same is true of agreements between parties, which can change the content of the initial proposals.

Planning with several scenarios is more useful than reacting to every headline. A company can prepare a base plan and a more prudent one, note which decisions it would hold off on until the specific policy is known and keep up regular communication with its advisers. Each scenario should indicate what would be done, on what timescale and what signals would lead to a change of plan.

Stability cannot be improvised, but it is welcome.

This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.