Political Unrest Threatens Spain’s Return to Economic Vigor<br />The gap between what investors were demanding for taking on Spanish debt and<br />that for taking on German debt — the least risky asset in Europe — has widened slightly in recent weeks.<br />The possibility that Catalonia might declare independence has left those banks vulnerable to being severed from Spain<br />and — by extension — the European Union and the bloc of nations that uses the euro currency.<br />That is likely to translate into higher borrowing costs for Spanish banks,<br />and less credit for Spanish businesses and households, depriving the economy of fuel.<br />Investors have taken heed of the independence referendum in Catalonia and the violent efforts from the Spanish authorities to halt the vote.<br />The Catalan leadership accused the Spanish government of inciting businesses to leave<br />as a means of pressuring Catalans to relinquish their independence aspirations.<br />The euro — seemingly never far from danger — was, at least for the time being, spared fresh crisis.
