"Catalonia is planning to hold a referendum on independence on Sunday 1 October," noted Rabobank analysts.
Key quotes:
"The referendum is deemed unconstitutional by the Spanish Constitutional Court, yet the Catalan government has claimed to declare Catalonia independent from Spain in case of a yes-vote."
"We think that the outcome will be in favour of independence, but only because we expect most anti-separatists not to vote. Turnout will expectedly be low enough to prevent the Catalan government from taking large irreversible steps towards independence."
"In the end, we believe Catalonia will mainly use the outcome of the vote to negotiate better terms and more autonomy for the wealthy region. Madrid seems prepared to offer Catalonia more money and autonomy, but it is unclear to what extent."
"Given the risen tensions it will be extremely difficult to restore the relationship between the central and Catalan government. The negotiation period is set to take a long time and with the ultimate risk of unilaterally declared independence, uncertainty will linger in markets."
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