MADRID/BARCELONA (Reuters) - Spain’s central government said on Thursday it would suspend Catalonia’s autonomy and impose direct rule after the region’s leader threatened to go ahead with a formal declaration of independence if Madrid refused to hold talks. 
 
 In an act unprecedented since Spain returned to democracy in the late 1970s, Prime Minister Mariano Rajoy said he would hold a special cabinet meeting on Saturday that could trigger the move. The Socialist opposition said it backed the government but suggested the measures should be limited in scope and time. 
 
 Catalan president Carles Puigdemont, ignoring a 10 a.m. deadline to drop his secession campaign, wrote a letter to Rajoy threatening a formal declaration of independence. 
 
 The war of words increased uncertainty over a standoff that has raised fears of social unrest, cut growth prospects for the euro zone’s fourth-largest economy and rattled the euro. 
 
 “If the government continues to impede dialogue and continues with the repression, the Catalan parliament could proceed, if it is considered opportune, to vote on a formal declaration of independence,” Puigdemont said. 
 
 Catalonia, which has a distinctive culture and language, triggered Spain’s biggest political crisis for decades with a secession bid it put to a referendum on Oct 1. Only 43 percent of voters participated but those who did voted overwhelmingly to secede, while opponents of secession mostly stayed home. 
 
 Spanish courts have ruled the referendum illegal, but Puigdemont says the result is binding and must be obeyed. 
 
 The European Union declined to help mediate, saying the crisis was for Madrid and Barcelona to resolve. 
 
 “Member states are clear there is no room or space for any kind of mediation,” European Council President Donald Tusk told a news conference during an EU leaders summit in Brussels. 
 
 The regional authorities have not made clear how and when a declaration of independence would take place and whether it would be endorsed by the regional assembly. Some pro-independence lawmakers have said they want to hold a vote in the Catalan parliament to lend it a more solemn character. 
 
 Rajoy plans to invoke Article 155 of the 1978 constitution, which allows taking control of a region if it breaks the law. 
 
 A senior government source said the exact measures would be agreed on Saturday and probably voted through the upper house Senate on Oct. 30, giving the secessionists a few days of leeway to respond before Madrid takes control. 
 
 The regional authorities could use that time to split unilaterally, call elections in the hope of strengthening their mandate, or back down, although this is seen as highly unlikely. 
 
 “From the moment the measures are known, the regional government knows what’s going to happen and has a period of time to act until 155 can be acted upon,” the source said. 
 
 A demonstrator wears an Estelada (Catalan separatist flag) during a gathering in front of the Spanish central government headquarters to protest against the imprisonment of leaders of two of the largest Catalan separatist organisations, Catalan National Assembly's Jordi Sanchez and Omnium's Jordi Cuixart, who were jailed by Spain's High Court, in Barcelona, Spain, October 19, 2017. REUTERS/Ivan Alvarado 
 
 Spanish stocks, bonds and the euro all suffered in early trade, but recovered, a bounce some strategists attributed to a sense that Madrid had the upper hand in the standoff. 
 
 LAW UNCLEAR 
 
 The terms of Article 155 are vague and could spur more wrangling with the restive region. 
 
 “The government will use all the tools available to restore as soon as possible the law and the constitutional order, recover peaceful cohabitation between citizens and stop the economic damage that the legal uncertainty is creating,” government spokesman Inigo Mendez de Vigo said in a statement. 
 
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 Rajoy’s team met members of the socialist party to coordinate their next steps. A spokesman for the Socialists said while they fully stood behind the government they would insist Article 155 is applied in the most proportionate way. 
 
 Madrid’s options range from closing down the regional parliament and expelling lawmakers, to a softer and more targeted approach, the government source said. Theoretically, the central administration could take control of the region’s finances and police, and call a snap election. 
 
 But some members of the Catalan government have already questioned this interpretation of the constitution, suggesting the stand-off could extend for at least several more days. 
 
 Carles Riera, a lawmaker from the pro-independence CUP party whose 10 deputies are vital to Puigdemont’s coalition, said dialogue with the Spanish state now looked impossible, and called on the leader to formalize a declaration of independence. 
 
 “From our point of view, the sooner this happens the better,” Riera told Reuters in the Catalan capital Barcelona. 
 
 Impatience is also setting in among residents of the port city. Merche, 55, who voted for secession in the referendum, said she was tired of the political to-and-fro. 
 
 “People want a resolution. Go for one thing or the other, but leave people in peace to carry on with their routine and their work,” she said, rearranging lettuces on her market stall. 
 
 Puigdemont has already defied Rajoy once this week, when he ignored a first deadline to drop the independence campaign and instead called for talks. 
 
 Rajoy says the Catalan government has repeatedly broken the law, including when it held the banned referendum and when it made a symbolic declaration of independence on Oct. 10, only to suspend it seconds later. 
 
 Puigdemont says a violent police crackdown during the referendum and arrests of pro-independence leaders on charges of sedition show the Spanish state has become authoritarian. ||||| Image copyright AFP Image caption There are fears that the latest moves could lead to unrest in Catalonia 
 
 Spain is to start suspending Catalonia's autonomy from Saturday, as the region's leader threatens to declare independence. 
 
 The government said ministers would meet to activate Article 155 of the constitution, allowing it to take over running of the region. 
 
 Catalonia's leader said the region's parliament would vote on independence if Spain continued "repression". 
 
 A referendum outlawed by Spain was held earlier this month. 
 
 Of the 43% who voted, 90% were in favour of independence. 
 
 Some fear the latest moves could spark further unrest after mass demonstrations before and since the ballot on 1 October. 
 
 Spain's supreme court declared the vote illegal and said it violated the constitution, which describes the country as indivisible. 
 
 Article 155 of the constitution, which cemented democratic rule three years after the death of dictator General Francisco Franco in 1975, allows Madrid to impose direct rule in a crisis but it has never been invoked. 
 
 BBC Madrid correspondent Tom Burridge says that for Madrid this is about upholding the rule of law in Catalonia, protecting the Spanish constitution and disciplining what it sees as an unruly, disobedient devolved government. 
 
 However, the central government wants to minimise the risk of large-scale demonstrations, our correspondent says. Civil servants and government lawyers have thought long and hard about what measures to adopt and when and how they should be implemented. 
 
 A slow game 
 
 By Katya Adler, BBC Europe editor 
 
 The Catalan crisis is reaching breaking point but we have to be careful here. Nothing will happen from one day to the next. 
 
 Political rhetoric aside, both the Spanish government and Catalan regional leaders know sentiments are running so high across Spain at the moment, that millions are poised to take to the streets. 
 
 Once the shopping list of measures has been decided, the Catalan leader has the right of reply and we're told there is no legal window of opportunity for him to do so, meaning this could take days or weeks. 
 
 Finally, the Spanish Senate needs to approve the measures. 
 
 Read more from Katya 
 
 What is Madrid's position? 
 
 Spanish Prime Minister Mariano Rajoy had set a deadline of 10:00 local time (08:00 GMT) for Catalan leader Carles Puigdemont to offer a definitive answer on the independence question, and called on him to "act sensibly". 
 
 When it passed, the Spanish government accused the Catalan authorities of seeking confrontation. 
 
 "The Spanish government will continue with the procedures outlined in Article 155 of the Constitution to restore legality in Catalonia's self-government," it said. 
 
 Media playback is unsupported on your device Media caption Why is there a Catalan crisis? The answer is in its past, as Europe correspondent Gavin Lee explains 
 
 "It denounces the attitude maintained by those in charge of the Generalitat [Catalan government] to seek, deliberately and systematically, institutional confrontation despite the serious damage that is being caused to the coexistence and the economic structure of Catalonia. 
 
 "No-one doubts that the Spanish government will do all it can to restore the constitutional order." 
 
 What happens now? 
 
 Mr Rajoy is currently attending an EU summit in Brussels. 
 
 The president of the European Council, Donald Tusk, says there is no space for any international mediation or EU action on the Catalan crisis - though he did say there was "no hiding that the situation in Spain is concerning". 
 
 On Saturday the government will be expected to draw up a list of specific measures under Article 155 of the constitution, launching the transfer of powers from Catalonia to Madrid. 
 
 Media playback is unsupported on your device Media caption Catalonia independence and some of Europe's border changes 
 
 The article says: "If a self-governing community does not fulfil the obligations imposed upon it by the constitution or other laws, or acts in a way that is seriously prejudicial to the general interest of Spain, the government... may... take all measures necessary to compel the community to meet said obligations, or to protect the above-mentioned general interest." 
 
 It is thought the measures implemented could range from taking control of the regional police and finances to calling a snap election. 
 
 Spain's Senate, controlled by Mr Rajoy's conservative Popular Party (PP) and its allies, would then have to approve the list. 
 
 Analysts say Article 155 does not give the government the power to fully suspend autonomy, and it will not be able to deviate from the list of measures. 
 
 And Xavier Arbós, a constitutional expert at the University of Barcelona, said the situation was moving into "uncharted territory". 
 
 He told the BBC: "We simply do not know what measures the Spanish government could enact. We do not know how the powers of the Catalan government could be affected." 
 
 Where does this leave the Catalan leader? 
 
 Mr Puigdemont said in a letter to Mr Rajoy on Thursday morning that the independence declaration remained suspended but this could change. 
 
 "If the government continues to impede dialogue and continues with the repression, the Catalan parliament could proceed, if it is considered opportune, to vote on a formal declaration of independence." 
 
 But he faces an uphill struggle - it is likely that senior figures in charge of internal security in Catalonia could be dismissed, and control of the region's police force could pass to Madrid. 
 
 The regional parliament could also be dissolved. 
 
 Image copyright Reuters Image caption Tough choices: How will Carles Puigdemont (L) answer Mariano Rajoy's ultimatum? 
 
 One Spanish newspaper has reported that Mr Puigdemont might nominally remain in his job but Madrid would aim to take control of many of his duties and powers. 
 
 Ultimately the process could end in regional elections but the Spanish constitution does not impose any time limit.
– Spain is dusting off a never-before-used emergency clause in its constitution in a bid to end the push for independence in Catalonia. How things will turn out remains very much up in the air. Specifically, Spanish Prime Minister Mariano Rajoy says he is beginning the process to invoke Article 155 of the constitution, which allows Madrid to suspend Catalonia's autonomy and impose direct rule, reports CNN. Spain could theoretically remove Catalonia's current leaders and take over the police and all government institutions, notes Reuters, but much is unclear because Article 155 has never been used. It was put in place after the downfall of the dictator Francisco Franco 40 years ago, intended for use only in a crisis. This is the first such crisis in the eyes of Madrid. All this was set off when Catalonians voted overwhelmingly for independence in a referendum deemed illegal by Spain. However, Catalonian leader Carles Puigdemont immediately suspended a declaration of independence and said he wanted to negotiate. Puigdemont has since dodged two deadlines from Madrid seeking clarification, prompting Rajoy to say Wednesday: “It’s simple and it’s not that difficult. It’s answering one question. Have you or have you not declared the independence of Catalonia?" If the answer is yes, he added, "the government is obliged" to "act in a certain way.” The next steps could drag out for weeks, explains the BBC. Rajoy's Cabinet meets Saturday to formalize the decision to invoke Article 155, which then needs to go through parliament. Then Catalonia would likely be given time to issue a formal response.