Spain's Jobless Rise 'Worse Than Feared'

Written By Unknown on Kamis, 25 April 2013 | 18.56

Spain's unemployment rate soared to 27.2% in the first quarter of the year, worse than economists had predicted.

The official figures revealed that the number of those without jobs surpassed six million for the first time - with 237,400 people added to the grim unemployment statistics over the period taking the total to 6.2 million.

Economists had expected the unemployment rate to grow from 26% in the final quarter of 2012 to 26.5%.

The figures were released by the country's National Statistics Institute against a backdrop of recession, which is expected to continue throughout 2013.

The Spanish economy, the eurozone's fourth biggest, contracted by 1.4% last year, the second worst yearly slump since 1970

The Bank of Spain has predicted a 0.5% fall in GDP during the first three months of 2013 while the International Monetary Fund's recent World Economic Outlook report expects a contraction of 1.6% over the 12 months.

Spain's problems stem from the collapse of its once-booming real estate sector in 2008, which resulted in a facility of up to 100 billion euros (£85bn) in rescue funds being made available by its eurozone partners.

The government has launched a series of financial and labour reforms and pursued a raft of spending cuts and tax increases that have managed to reduce a swollen deficit but been blamed for choking economic growth.

Despite the measures, Spain had the highest budget deficit among the 17 European Union countries that use the euro in 2012.

Its Budget, due to be announced on Friday, is expected to focus less on austerity and include more measures to stimulate activity in the economy.

A key fear behind Spain's soaring unemployment crisis is that it is damaging the country's prospects by consigning a generation of young people to financial hardship.

The official statistics agency for the European Union, Eurostat, said earlier this month that youth unemployment in Spain had topped almost 56%.

Analysts expect the Budget to try and address the issue, despite the spending constraints faced by Mariano Rajoy's government, as he took office in December 2011 on the back of a core pledge to create jobs.


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