Reuters International

MADRID (Reuters) - Catalonia's secession drive suffered a big blow on Wednesday when one party backing the Spanish region's pro-independence government rejected the annual budget bill, a move that could prompt a confidence vote in September.

The anti-capitalist CUP, which backed a coalition government of separatist parties in January, said the budget had been dictated by Spain's central administration and did not include enough spending on social and pro-independence issues.

After the budget bill failed, the head of Catalonia's regional government Carles Puigdemont said he would call a confidence vote in September to test whether his administration still had the CUP's support.

"We don't have a budget and we don't have a parliamentary majority," Puigdemont told Catalan lawmakers.

Although parties seeking independence won local elections in September, separatist fervour in the wealthy region has dulled since 2012 when, at the height of Spain's recession, rallies drew about a million people onto the streets of Barcelona.

A tentative economic recovery in Spain has started to chip away at one of the highest unemployment rates amongst developed nations and Catalan businessmen have warned that political uncertainty in the region could put off investors.

The budget bill's failure highlights the frailty of Catalonia's separatist administration at a time when Spain itself has been without a government for six months after a December election that failed to deliver a clear mandate.

If the coalition breaks down and CUP votes against the government in September, new regional elections would be called.

The future of Catalonia was a major sticking point for national parties in failed talks to form a coalition administration after December's elections.

Whether to allow Catalans a referendum on independence is a key policy difference between new leftist party Podemos, which supports a vote, and the more established Socialists, who don't.

(Reporting by Sonya Dowsett; Editing by Julien Toyer and Catherine Evans)

reuters_tickers

 Reuters International