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Exactly a year ago, on 6th October 2017, five days after Catalonia's independence referendum amid grave police violence, Mariano Rajoy's Spanish government stoked the fire even more with the approval of an executive order to fast-track company transfers of their registered business addresses out of Catalonia. It was an incendiary action that acted to fuel the doom-laden discourses being spread around at the time about the Catalan economy. The executive order, published in the state gazette the following day, justified the action through the existence of an "extraordinary and urgent need" to "guarantee the full validity of the principle of free enterprise enshrined in article 38 of the constitution" and to "respect the prohibition to take measures that could hinder the freedom of establishment of economic operators provided for in article 139 of the Constitution".

What it amounted to was a legal change that “facilitated” the wishes of companies, to move their registered business addresses out of Catalonia since, in some cases, such as that of major financial institution CaixaBank, its company by-laws made it necessary to ratify a board decision via a shareholders meeting, which meant the process would take longer. At the same time, the passing of the executive order gave even more strength to the unionist argument that “companies are leaving Catalonia en masse”, reinforcing the idea of the “economic and financial insecurity” of the territory; effectively, setting up a vicious circle.

The order, approved the same day as CaixaBank moved its business address to Valencia, following the footsteps of Banco Sabadell, which the previous day had replaced the Catalonia address listed as its own official headquarters with that of its existing office in Alicante. It thus facilitated the change of registered addresses of many companies - exactly 2,501, according to the Catalan ministry of enterprise and knowledge - as well as supporting the narrative asserting that economic damage was being done by the independence process. A year later, however, no “catastrophe” is seen, and the change of business addresses which did take place has had "zero economic impact" according to the report released by the enterprise ministry.

Rajoy's strategy 

On Friday, Barcelona newspaper Ara detailed how the Spanish state withdrew billions of euros deposited in Catalan banks, in particular CaixaBank and Sabadell, on 2nd October, the day after the referendum. According to Ara, the flight of money from the banks involved the deposits from several state-owned companies, such as the rail companies Renfe and Adif, the port operator Puertos del Estado, Spanish public broadcaster RTVE, and others. That week was to end with the transfer of those key banks' business headquarters out of Catalonia, after the approval of the executive order, a year ago on October 6th. 

According to the sources who spoke to Ara, the managing director of Banco Sabadell, Jaume Guardiola, spent the day phoning directors of these public companies to find out the reason for the massive withdrawals of funds. They responded that the moves were “political orders”. This emptying of accounts stretched on for several days and the objective seemed clear. A bank executive spoke to the Spanish treasury minister, Luis de Guindos, after confirming that a state company had withdrawn its deposits. De Guindos replied: “Have you changed your business headquarters? Then you don't have to worry”. Within a matter of hours the money that had left the bank's accounts had returned. A year afterwards, neither of the two banks have considered returning to Catalonia, but the official narrative on what happened is now leaking like a sieve. 

The flight of head offices, one year on

One year later, the executive order is still in force and, in spite of the rise to power of new Spanish PM Pedro Sánchez, the measure does not seem to have an expiry date. Although it is true that the majority of companies that moved their business addresses have not re-altered the paperwork to move them back, some have done so, such as water utility Agbar, which decided to come back to Barcelona less than a month ago.

There are other companies, just as important as Facebook, who want to come to Catalonia but can't find a location, as there is more demand than supply"

And meanwhile, it needs to be well understood that in spite of the intention to politicize the business community, the 12 months since the referendum have seen major multinational businesses setting up in Catalonia, as is the case of Facebook, Amazon, King and Satellogic, among many others.

Manel de Bes, director of the commercial property department for the real estate consultancy Immobiliària Forcadell, told El Nacional that in the last quarter of 2017, icy months for the Catalonia-Spain conflict, many important operations were signed, such as those mentioned above, adding that in “the first half of 2018 we are reaching record figures, with more than 200,000 square metres of office space leased in Catalonia,” dimensions similar to those of “the boom period [prior to 2008]”. “There is a positive trend among companies to look for a location in Barcelona in which to set up, and at Forcadell we don't see any signs of that slowing down”.

The discourse loses persuasiveness

"I don't know if the independence process has affected things a lot or a little”, explains de Bes, “but the scare that companies were leaving en masse has been shown to be false”. In fact, as he explains, “the growth trend that started in 2015 is clearer all the time".

In this regard, he recounts that the only investment which Forcadell handled that came to a halt after the referendum was for “an American multinational, which after the 1st October put the project in stand-by,” but “now we have taken the matter up again and are about to sign the contract”, says de Bes.

Furthermore, Catalonia's enterprise minister Àngels Chacón has stated in recent days that "Catalonia continues to lead the Spanish state's figures as the place where the most companies have their business headquarters", accounting for 18.5% of the Spanish total. In fact, "2017 was the year with the most CIFs - tax codes - from the rest of Spain being registered in Catalonia". The report also shows that "from May 2018 onwards the trend for business addresses to be moved has dropped, tending to its former levels" - which it reached in August. 

El Nacional graph based on data from INFORMA/Catalan ministry of enterprise and knowledge

Beyond politics, Catalonia appeals

Catalonia, and especially Barcelona, is a "magnet for attracting international talent". This view is not only the view of Manel de Bes, but one that is also shared by Miguel Vicente, president of Bcn Tech City, Laura Urquizu, CEO of Red Points, Josep González, president of Pimec, and a string of personalities in the Catalan entrepreneurial world. “Barcelona is an ideal place for start-ups, for example,” explain the team at Forcadell, “because the lifestyle attracts the talent” and, moreover, “the prices are much more competitive compared to those of London or Paris”. In the same line, “Barcelona has qualities that those other cities can't compete with”, they assert.

“There are other hugely important companies that everybody knows, at the scale of Facebook and Amazon, that are searching for a location in which to set up in Barcelona and can't find one” because there is “much more demand than supply”, explains the Forcadell commercial property director. Without revealing any names, de Bes assures that “there are a couple of very powerful multinationals in this situation”.

Catalonia continues attracting foreign investment aimed at the expansion of logistics projects”

Another important factor in the attraction of companies is “the developments that have been made throughout the 22@ technology district, which according to calculations will have more than 20,000 square metres of space leased by next year,” explains de Bes. In fact, the high demand for offices and business spaces in Barcelona and the scarce supply means that most projects under construction are rented out before they are fully built. "People in the sector joke: and what we will have left to rent out next year?" says the Forcadell executive.

Newcomers arrive, while those already here expand

Another key factor, besides large businesses searching for a base in Catalonia, is that of those companies already present that “continue making further commitment to the territory and want to expand their centres here”. One such case is one of the leading specialists in coworking, WeWork. WeWork confirmed last September its arrival in the 22@ zone, specifically in the Luxa Gold building, a neighbour of Amazon; now, the property consultancy Forcadell, has the project of leasing two further buildings for the firm in 2019, with the plan to reach a total of 30,000 square metres of floorspace in Barcelona.

The flight of business head offices "has had neither economic nor fiscal impact"

As well, “Catalonia continues to attract foreign investment centred on the expansion of logistics projects”, according to Gerard Plana, director of Forcadell's industrial and logistics property area. Plana says that in the last few months, foreign logistics companies that were already installed in the Catalan capital have decided to expand their projects with large warehouses. This is the case of UPS, Venta Privé, Mercadona (in the Zona Franca) and Amazon (in Barberà del Vallès), among others.

And what about the companies that left?

According to the enterprise ministry report, the great majority (80%) of the firms that, on paper, "left" Catalonia - that is, they wrote a new business address, outside Catalonia, on their company registration details - are micro and small enterprises in the service sector. The majority - 61% - of the company tax codes that have been transferred out of Catalonia have switched to an address in Madrid. Of the non-service sector companies who have made the change, 12.2% are industrial, 7% are in construction and 1.2% are agricultural. 

The fact that the great majority of these companies operate in the service sector implies "practically zero effect on the productive base" of Catalonia, since the production centres in Catalonia have stayed where they were. According to the Catalan ministry, the flight of business addresses "has had no fiscal impact" either, "since company tax is not even paid in Catalonia as it is a state tax. 

"Welcome in Catalonia, now and always"

The data is what it is. It is true that many companies re-wrote their company registrations so that their headquarters became officially changed to addresses outside Catalonia, but it is also true that all the time there are more and more major international businesses that are putting major resources into finding sites in Catalonia on which to set up a southern European hub. 

Summing it up, minister Chacón reiterated during the presentation of the report on the impact of the business address changes, that the companies that left are "welcome in Catalonia, now and always", but she stressed that "no tax incentives will be put in place for their return". At the same time, the minister admitted that "people are clearly aware that there are companies that left who were afraid of facing a boycott", and that the approval of the Rajoy government's executive order after the 1st October referendum "had a political intention" and "was not justified". In any case, the Catalan government says that "meetings are being held" with the companies that shifted their addressess and that "the results will soon be seen".