Does Catalonia get the lion’s share in Spain?

The results of a survey conducted across Spain by Catalonia’s government pollster (CEO) have caused quite a stir. Respondents were interviewed about interesting topics such as which regions they believe are treated more favourably by Spain’s central government. 64.7 per cent of non-Catalan respondents think Catalonia gets the lion’s share, with Madrid and the Basque Country trailing far behind. But how much truth is there in that sentiment? Is there any basis to suspect that the general public confuse “privileged” with “wealthiest” or, to make an even finer point, they confuse “privileged” with “the region that receives the most funds from the central government”?

Since 2016 we have had an extremely valuable tool to measure actual well-being, which is essentially the result of public services rendered and paid for with taxpayer’s money. This tool is known as the Social Progress Index (SPI) and it is worked out by the European Commission for each of the EU’s 272 regions. In the case of Spain, each autonomous community is one such region. The SPI aims to be an alternative to GDP per capita. It is not based on economic data, but on fifty indicators that mainly monitor social and environmental outcomes (mortality rate, road safety, CO2 emissions, internet access, enrolment in advanced education, etc), as well as subjective perception indicators (confidence in justice and the police, tolerance of minorities, rate of satisfaction with housing and quality of air, and so on). The results might show a bias in the case of certain countries due to the more subjective indicators. However, the bulk of them are unequivocal measurements that lend credence to the exercise. At any rate, they allow for a fresh, novel and accurate approach to establishing the levels of well-being in Spain’s regions.

So what do the results show? With the data gathered between 2010 and 2013, right in the middle of the recession, the three wealthiest regions in Spain also topped the SPI index: Madrid, the Basque Country and Navarre, in that order. Catalonia was the fourth region in terms of GDP but dropped down to the 12th place on the SPI scale (from a total of 17 regions). Is there another autonomous community in Spain that scores as poorly on the SPI index, despite a good performance in terms of GDP? Indeed there is: the Balearic Islands drop from the seventh to the sixteenth place. All the other regions mostly keep the same slot when shifting from one index to the other. The regions that come out on top are Cantabria (up five places on the SPI), Asturias (four places), plus a few others that climb three spots.

How can we account for such a major drop in the case of Catalonia and the Balearic Islands? The ruling political parties in both regions were different at the time so that does not provide a convincing explanation. The economic climate was the same as in other regions, especially on the Mediterranean, where key sectors like tourism and construction were hit particularly hard. The quality of their institutions was on a par with many others. There is only one element that carries enough weight to explain why regions with a good GDP per capita score so poorly on the SPI: a fiscal imbalance. Whenever the fiscal balance has been examined through the monetary flow model (which takes into consideration where spending takes place), the Balearic Islands have always emerged as the big loser, with Catalonia taking second place. When the Spanish government worked out the figures themselves for 2005, it transpired that the Balearics’ fiscal deficit amounted to 14 per cent of the region’s GDP. Catalonia’s was 9 per cent. The Spanish regions who have endured such an uneven transfer of funds from the State’s coffers have ended up impoverished as a result. Not only have these two regions funded their poorer peers, but they have also transferred revenue to wealthier regions and others whose GDP per capita was lower but eventually scored higher on the SPI as a result. This has resulted in worse public services in Catalonia and the Balearics, regardless of what party was in government at the time.

This conflict is systemic. We are faced not merely with deeply-rooted interests, but also with the perception —stoked by Madrid-based media who misinform systematically— that Catalonia receives a special treatment from the central government. In fact, nothing could be further from the truth! Any well-meaning policy that seeks to redistribute wealth and improve public services locally and at regional level will be welcome, but the key problem is the imbalance between the revenue that the State keeps and the funds that get transferred back to Catalonia and the Balearics. Until this issue is properly addressed, the bitter complaints coming from Catalonia and the Balearic Islands will be completely justified.