Economic Output - Catalans Vote As Secession Push Piles Strain On Rajoy - Bloomberg

Catalans began voting for a regional government, driving a push for independence that may weaken Spanish Prime Minister Mariano Rajoy .

More than 8,000 polling stations opened across the northeastern region at 9 a.m. today to select 135 lawmakers who will decide whether to press on with Regional President Artur Mas s plan to hold a referendum on separating from Spain .

Catalans are set to hand nationalist parties a majority in the regional parliament, setting them on a collision course with Rajoy s national government in Madrid , which has held that a referendum on secession would be unconstitutional. Mas was on track to claim 62 seats and the separatist Catalan Republican Left another 18, according to a Metroscopia poll published Nov. 18 before the pre-election blackout period.

The Catalan government is likely to push for a legal referendum to be held within the next two years, Antonio Barroso , a political analyst at Eurasia in London and a former Spanish government pollster, said in a Nov. 20 research note. Mas cannot backtrack once he is re-elected.

Mas s ambition poses a constitutional crisis for Rajoy who s battling to keep a grip on the country as European officials urge him to cede control in return for bailout funds he needs to bring down borrowing costs. Scottish nationalists, who plan their own independence vote, are monitoring the result of the Catalan vote.

Catalan Debt

The 7.5 million Catalans make up 16 percent of the Spanish population and last year contributed 19 percent of the country s economic output . Madrid is the second-biggest regional economy, with 18 percent of national output. Catalonia is the country s most-indebted region, with total borrowing of 48.5 billion euros ($63 billion). Moody s cut its to junk on Aug. 31.

The fallout from s debt crisis has shut Catalonia out of financial markets, making it more dependent on the central government, while at the same time fueling the campaign to break away. Mas was forced to ask Rajoy for a 5 billion-euro lifeline to pay operating expenses.

Mas has blamed tax transfers to the rest of Spain for the area s financial woes and has pushed for independent tax collection. The region transfers 15 billion euros, or 8 percent of its economic output , to the rest of Spain.

Rajoy says he ll block any referendum Mas proposes. Foreign Minister Jose Manuel Garcia-Margallo said it would be tantamount to a coup.

I won t abandon it, Mas said in a Nov. 19 radio interview. If there s a majority of pro-independence lawmakers from his party and others in the regional assembly, it would be fraud to ditch the planned vote.

Seats in the regional assembly will be determined by a system of proportional votes with the province of Barcelona choosing 85 lawmakers and the rest distributed between Girona, Lleida and Tarragona. Parties need to win at least 3 percent of the votes in a province to be allocated seats.

To contact the reporters on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net