Bruegel's Wolff: Catalonia is a huge issue not only for Spain but for Europe

Impact on Spain's credit rating

Guntram Wolff, director of European economic think tank Bruegel, has said Brexit is "nothing" in comparison to the potential impact on Europe if the situation in Catalonia escalates further.

Speaking at a Columbia Threadneedle conference, Wolff said the conflict would be bad for Spain's credit rating, GDP and tax revenues, while also pointing to the negative impact for Catalonia as two major banks are already looking at moving their headquarters to other parts of Spain. Spanish 10-year government bond yields widened by 5bps to 1.603% on 27 October after Catalonia's government delcared independence, a move which is likely to be declared illegal by Madrid. Furthermore, Banco Sabadell - one of Spain's biggest banks - announced on 5 October it was moving its headquarters to A...