Spain cuts growth outlook

Output will grow by 2.3% next year instead of the 2.6% previously projected, the economy ministry said, citing the impact of the political standoff in Catalonia, which accounts for a fifth of Spain’s gross domestic product, and the related struggle to approve a budget.

The Spanish economy is set to grow by 3% for a third straight year in 2017 after Prime Minister Mariano Rajoy’s reforms helped the country shake off the worst recession in its modern history, earning the endorsement of the European Commission. The standoff in Catalonia is set to put a dent in that run.

The Spanish state is turning up the pressure on the separatists as Mr Rajoy tries to persuade Catalan President Carles Puigdemont to drop his claim to independence. Mr Rajoy has threatened to take direct control of the region unless Mr Puigdemont backs down by 10am tomorrow.