Mr Rajoy's government gave Mr Puigdemont a Monday deadline to clarify whether he really declared independence.
He said in Luxembourg that he "wouldn't like a European Union that in 15 years consists of 98 states". The deputy prime minister also said that hotel reservations in Catalonia were now falling 20 percent to 30 percent.
Spain's deputy prime minister says Catalonia faces an "economic recession" if the secession standoff continues in the northeastern region.
Around 40 Catalan banks, multinationals and mid-size businesses have moved their registered addresses out of the troubled region. "Investments have fallen 10 percent in Catalonia even as they've increased 3 percent in the rest of Spain", Santamaria said.
In a widely-anticipated speech this Tuesday, Catalan president Puigdemont had told the regional parliament that the people of Catalonia had won the right to independence following the referendum vote on October 1 where nearly 90% of voters had backed independence from Spain.
Puigdemont made a symbolic declaration of independence on Tuesday night, only to suspend it seconds later and call for negotiations with Madrid.
On Tuesday, the leadership of Catalonia signed a declaration of independence, which is not yet in force.
The ANC is a civil society group that organized massive protests in support of secession.
Spain's government has threatened to activate unprecedented measures to take over Catalonia's self-government if secession plans go forward. He had said that Catalonia was proceeding with a declaration of independence, but proposed freezing its implementation for a few weeks to allow for dialogue and mediation with Spain's government.
Catalan leader Carles Puigdemont came under pressure from one of his key allies on Friday to declare full independence and ignore a threat of direct rule from the Spanish government.
Just a day after clashes broke out in Spain between Catalan independence supporters and pro-unity followers during the National Day celebrations, European Commission President Jean-Claude Juncker has today expressed concern about separatist tendencies in Europe and how he had asked Spanish Prime Minister Mariano Rajoy to stop the Catalans "running amok".