The election of a new leader in the Spanish region of Catalonia over the weekend is unlikely to result in independence for the region, analysts believe.
The developments are also likely to spur on activity at the national level, with parties against Catalan independence under more pressure to reach a deal on a functioning state.
The formation of a new government in the Catalonia region was kickstarted when President Artur Mas stood down at the weekend, allowing an agreement between two independence parties and the election of Carles Puigdemont.
Puigemont is expected to continue Mas’ mandate of achieving independence within the next 18 months.
“We continue to think greater financial autonomy rather than separation will be the endgame,” economists at RBS said.
“The Catalan pro-independence majority is fragile, and could encounter many more areas of serious disagreement on the road to independence.”
The new Catalan coalition only has a four seat majority in a 135-seat house. The issues of currency and EU membership – problems that plagued independence supporters in Scotland – are also going to cut the chance of a separatist victory.
“Uncertainty around Eurozone membership for an independent Catalonia. Under the Lisbon Treaty, Catalonia would need to be recognised as a ‘state’ by all 28 member states, including Spain, for it to gain EU membership. Uncertainty around continued EU membership could deter Catalan voters from supporting independence in the event of a referendum,” the RBS economists added.
Following a hung parliament in national elections at the end of last year, it is also expected that negotiations between national parties will be spurred on to battle the separatist movement.
"The last-minute formation of a pro-independence government in Catalonia in our view, increases the pressure to form a government at national level," said Marco Stringa, senior economist at Deutsche Bank.
Stringa views the most likely scenario as a a People's Party government with the support of the PSOE – the main left wing party – and Citizens, as anti-independence parties try to quash separatist sentiment at the national level. Podemos, the new far-left party which has rapidly gained popularity over the last two years, is in favour of a referendum on Catalan independence.
"This threat will accelerate at the margin the negotiation process in Madrid, be that through the formation of a coalition government or fresh new general elections. It also increases the pressure on PSOE to discuss a “grand coalition”, as well as keep the pressure on Mariano Rajoy to be replaced as the candidate for President (one of the conditions that PSOE may well require)," said economists at Societe Generale.
"It also reduces the chances of a left-wing coalition, given Podemos’ insistence on the right to a referendum in Catalonia."