Fresh tensions between Barcelona and Madrid likely, Citi says

The creation of a new government in the Spanish region of Catalonia over the weekend is unlikely to deliver full independence, even in the long-run, but fresh tensions with the central government in Madrid can be expected to materialise soon, Citi told clients.

On 9 January, the main Catalan independence parties named Carles Puigdemont as the new regional premier after Artur Mas, who has been dogged by allegations of corruption in the past, announced he would step down.

Puigdemont reaffirmed his plans to push for independence from Spain in the next 18 months by putting into motion the prod-independence roadmap approved in the regional parliament on 9 November 2015.

However, "large differences within the pro-secessionist camp, as well as the wide opposition by Spain's main national political parties, makes Catalonia’s independence unlikely," Citi analyst Antonio Montilla wrote in a research note sent to clients.

Nonetheless, the new government in Barcelona was likely to try and set up new Catalan institutions, resulting in tensions with Madrid.

"Renewed secessionist risks in Catalonia may increase pressure on national parties to agree to form a new Spanish government, after the inconclusive 20 December elections," Montilla said.