Deal Struck That Could See Sanchez-Aligned PSC Lead Catalan Gov't

On the evening of 29 July the centre-left Socialists' Party of Catalonia (PSC) and the left-wing pro-independence Republican Left of Catalonia (ERC) reached a preliminary agreement that could see PSC leader Salvador Illa elected as the next President of the Gov't of Catalonia.

• El Pais reportsthat under the prospective deal, approved by the gov't of PM Pedro Sanchez in Madrid, "The Generalitat will have control over the finances, managing, collecting, settling, and inspecting all taxes, [...]. The transfer of tax control will be "gradual," marking progress in fiscal sovereignty, though no specific completion date was provided. The agreement is seen as preparation for potential Catalan independence."
• The proposal now goes to around 8,700 ERC members who will vote on whether to back the agreement. Members will be allowed to assess the text of the deal from today, with the result expected by around 2000CET on Friday 2 August. If ERC members approve, an investiture vote could be called as soon as the middle of next week.
• The nascent alliance would also need the backing of the left-wing Comuns Sumar to carry a majority.
• A PSC-led gov't is likely to be viewed positively by markets in terms of stability in the short-term at least, with any immediate push towards Catalan independence and the associated economic and political upheaval put off for now. However, as El Pais notes, the agreement's shift of tax control away from Madrid and to Barcelona could be seen to lay groundwork for an eventual Catalan independence push.

Source: Government of Catalonia