Suspending Catalan autonomy is likely to deepen crisis
Madrid is set to impose direct rule in an unprecedented step
The Spanish government will hold an emergency cabinet meeting on October 21 to begin the process of suspending Catalan autonomy under Article 155 of the constitution, Prime Minister Mariano Rajoy said in a statement published this morning, after Catalan leader Carles Puigdemont missed a final deadline to clarify whether he has declared independence. In a letter sent to Rajoy earlier this morning, Puigdemont warned that the Catalan parliament could move to vote on "a formal declaration of independence" if Madrid continued to "prevent dialogue" and use "repression". The political uncertainty has spilled over into financial markets, with the spread between Spanish and German ten-year government bonds rising to 127.8 basis points from 122.5 points yesterday.
Our judgement
Invoking Article 155 will likely take several days. The vague terms of the law mean it is unclear what direct rule will look like. Madrid could allow Puigdemont to remain in his position but strip him of most of his powers, or call regional elections. Divisions within the pro-independence camp are set to deepen as there is little agreement over whether Puigdemont should use the small window of opportunity before direct rule comes into force to call regional elections or proceed with declaring independence.
See SPAIN: Madrid is likely to suspend Catalan autonomy - October 17, 2017