BARCELONA, Spain — Just as Spain’s fashion industry was showing signs of revival following a long recession, the political upheaval and violence surrounding Sunday’s Catalan independence vote have thrown a spanner in the works.
“We’re concerned about the image we are projecting on an international level and the impact on volume and sales not only in the Spanish market but also abroad,” Lucia Soriano, director at Fedecon, the Spanish clothing federation, tells BoF. “Tourists are cancelling their vacations, business is cancelling trips to Catalonia — it’s going to impact sales. Companies might not want to invest in Spain.”
Last Sunday’s vote in favour of independence in Catalonia, a region in Northeastern Spain with a secessionist history, and the violence that erupted as police dismantled polling stations, has shaken the political establishment. The people of Catalonia staged a one-day strike and separatist leader Carles Puigdemont has vowed to declare an independent state. Spain’s usually reticent King Felipe VI made a surprise intervention, criticising the Catalan government’s decision to hold the “irresponsible” vote despite not having constitutional backing. Analysts say the outlook is unclear. It’s just one of many nationalist and populist movements that have been threatening the democratic model globally, from the independence movement in Scotland, to the rise of far-right parties in France and Germany.
The depth of that impact will depend on the length of the disruption, which is unclear at this stage. “Our growth forecast is in a wait-and-see mode right now,” says Peter Ceretti, southern Europe analyst at the Economist Intelligence Unit. “The question is the extent to which it causes real disruption. If this festers, we will see a loss of consumption and investment in the region. Catalonia absorbs about half of start-up investment and large share of foreign investment, so foreign investors might decline and large firms move headquarters to other parts of Spain the longer it goes on. It’s a tricky situation.”
Our growth forecast is in a wait-and-see mode right now.
For the fashion industry, more worrying may be the long-term impact on an economy that has really only just started to thrive. Catalonia, whose capital city is Barcelona, is about 19 percent of the country’s gross domestic product and 16 percent of its population. It is also one of the fastest-growing regions.
The collapse in the housing market shattered Spain’s economy in 2008 and it fell into a long recession. But the Eurozone’s fourth largest economy has started to show growth momentum in the last two years, with GDP growth of 3.1 percent in the second quarter, back to pre-recession levels.
That growth has prompted a return of fashion brands to Spain: Uniqlo opened its first Spanish store on the Paseo de Gracia, a prestigious shopping street in Barcelona, this year, while local giant Inditex opened its biggest-ever Zara in Madrid. The return of Balenciaga to Barcelona, whose Spanish founder Cristóbal is celebrated in a dedicated museum in the Basque city of Getaria, was seen as a symbolic move amid the country’s economy revival.
Fashion accounts for 2.9 percent of gross domestic product in Spain, an increase from 2.7 percent a year earlier. ACME, the Spanish Fashion Designers Association, which represents labels including Delpozo, Custo Barcelona, Emilio De la Morena, Adolfo Domínguez and Pedro Del Hierro, says the combined revenues of its brands would equate to $476 million (or €405 million at current exchange).
“Nervousness and sadness is the general mood” says Pepa Bueno, director of ACME in Madrid. “For everyone, not just the fashion industry, you have to wait and see what is going to happen. It will have an effect, definitely.”