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Retailers in Spain’s financial capital, Barcelona, have been selling off stocks as investors flee the country’s markets amid fears that Brexit could disrupt the countrys economic recovery.
The move came as the stock market fell 1.5% on Friday and is expected to continue on Monday as the government seeks to avert a major default on the country`s €2.5bn ($3.1bn) debt.
Catalonia`s regional government and the central government in Madrid have vowed to keep their economic recovery intact, while the European Central Bank has been pushing to extend its bond-buying programme.
The Catalan government and central government have been in talks over a plan to extend the programme by another month to allow the economy to recover.
The central government has asked Catalonia`€5bn bailout package to be extended until the end of March and is demanding that the central bank guarantee the bailout fund of €30bn, while Catalan Finance Minister Fernando Collomb has said that he will ask the ECB to extend another month of the bailout.
Spain has seen a huge fall in the value of the Spanish currency since Brexit, with its stock market plunging by 5.5%.
Catalan finance minister Fernando Collombs office said in a statement that he is also demanding that all the EU countries guarantee the debt and that they must guarantee the support of the central banks of Germany, France and Italy.
Catalonia is one of Spain`s most important financial centers and is a major hub for exports to the eurozone.
However, the Spanish government has said it will not pay a penny for the loans to Catalonia, and Catalonia`ll only receive about €40bn of the money if the central governments agree to extend their bailout.
“If the central authorities don`t agree to the terms, the central bankers are free to go ahead with the bailout, and it`s not clear if that will happen,” Collomb said in an interview with the Spanish news agency EFE on Thursday.
Spain is one in the most expensive countries in Europe for foreign investors, and the stock markets have been on the brink of collapse for some time.
Collomb accused the central state of being “unfair” to Catalonia and said that Catalonia should not be treated as a “strategic” asset.