(Removes erroneous reference to Montreal as Quebec’s capital)
* Catalan pro-independence parties push for split from Spain
* Government hopes parties in favour of union will win Dec vote
* Political uncertainty draws comparisons with Quebec
* Canadian region’s economy suffered after 1995 independence vote
By Sonya Dowsett and Allison Lampert
MADRID/MONTREAL, Dec 5 (Reuters) - A flight by businesses from Catalonia’s independence crisis has drawn comparisons with Quebec, the French-speaking Canadian province that deterred investors with a decades-long independence push.
Opinion polls showed support for pro-independence parties at just under 50 percent as campaigning for a Dec. 21 election began on Tuesday, enough to dampen the Madrid government’s hopes the vote would end a volatile standoff over secession.
“Carrying on as before means chaos,” said Jordi Alberich, managing director of Cercle d‘Economia, a business association based in the Catalan capital, Barcelona. “What has happened is tremendously serious and it could get even worse.”
The election is seen by pro-independence parties as a de-facto referendum on a split from Spain following a banned plebiscite which led to clashes between Spanish police and protesters on Oct 1 and the subsequent dismissal of the Catalan government by Madrid.
While it may not propel secessionist forces back into regional government, it could end up sustaining their cause and thereby putting off investors over the longer term.
Almost 3,000 firms have shifted their headquarters outside the region, many to Madrid, mirroring the flight of companies from Quebec’s Montreal for Toronto before and after its first referendum in 1980 delivered defeat for independence.
The Catalan exodus has so far been administrative rather than physical, with companies effectively shifting domiciles, the ‘brass plate’ of the business, to avoid legal and tax complications rather than moving staff or operations.
They fear secession would leave them outside the euro zone and exposed to the uncertain policies and possible tax grabs of a new republic burdened by the region’s existing large debts.
Madrid, eager for unionist parties to score a clear victory on Dec. 21 and put the crisis to rest, says the economic impact will be only short term, but there are signs the uncertainty is already affecting longer-term investment decisions.
“If I had been contacted by an American investor asking: ‘Should I open a small office in Barcelona?’ three or four years ago, I would have said: ‘Yes, of course’,” said the Spain country head for an international investment bank.
“Now I can’t say that anymore ... The pain inflicted by the independence process scares money away.”
He, like other bankers and chief executives, declined to speak publicly because the issue is divisive. Those who speak out for one side or other can become targets of criticism and abuse.
The Spanish government has already trimmed its 2018 economic growth forecast to 2.3 percent due to the Catalan crisis, and its Independent Authority of Fiscal Responsibility has warned of a bigger impact next year if it is not resolved.
Tourism to the region and its main draw card, Barcelona, has slumped, leading to Spain’s first fall in retail sales for more than three years.
Spain’s economy minister recently noted a “strong deceleration” in Catalonia in the final quarter, and the central bank published an analysis last month based on scenarios that implied impacts ranging from modest to dramatic.
In the worst case, it said political uncertainty could cut economic growth by 2.5 percentage points between end-2017 and 2019.
In a recent report, “Catalonia, history repeating?”, Canadian bank RBC Capital Markets compared it with the fallout from Quebec’s 1995 referendum, which delivered the narrowest of defeats for independence and was followed by economic decline.
"Even if the independence parties fall short of a majority, the damage may have already been done," it said of Catalonia's December vote. Graphic tmsnrt.rs/2AGBazV
The Spanish region’s pro-independence camp says it pays more than its fair share of tax income out of the country’s 17 regions and during the five-year economic crisis its stronger economy propped up poorer areas such as Andalusia and Murcia.
The biggest pro-independence party, Esquerra Republicana de Catalunya (ERC), has dismissed government warnings secession would cause economic damage and launched its campaign focusing on social issues like housing and energy poverty.
Quebec’s independence movement, triggered by the 1960s push by French-speakers for economic equality, led to a decline in the province’s English-speaking population and its economic affluence, with banks and companies moving their head offices from Montreal, then a thriving financial hub.
Canada’s second-most populous province has made economic strides in recent years, but it continues to lag other provinces in indicators like household income.
Between 1970 and 1981, as pro-sovereignty Parti Quebecois gained political momentum, Montreal lost 18,992 head offices in resource, manufacturing and service sectors, according to a 1983 University of Saskatchewan study. Canada’s largest life insurance company was among those which left in 1977.
Politics was not the only factor. Montreal’s older manufacturing economy was already facing competition from Toronto.
“The relative decline of Montreal – and the exodus of headquarters – was no doubt exacerbated by politics but was not solely caused by politics,” said Richard Shearmur, a professor at McGill University’s school of urban planning in Montreal.
The Catalan crisis has drawn interest in Quebec: last week, two members of Catalonia’s secessionist Candidatura d‘Unitat Popular (CUP) party spoke at an event organised by a left-leaning Quebec opposition party.
But Quebec polls show support for separation, especially among young adults, is in decline, while in Catalonia polls show pro-independence parties continue to command strong support.
The last Catalan government was made up of a coalition of pro-independence parties under the name ‘Together for Yes’, propped up by CUP lawmakers who did not join the government’s ranks. Opinion polls show pro-independence and pro-unity parties almost in a dead heat for December’s election.
Editing by Mark Bendeich and Philippa Fletcher