Spain plunges towards the abyss: Unemployment rate approaches U.S. level of 25% during the Great Depression

April 28, 2012 – SPAIN – Spanish unemployment has hit a new record high, official figures have shown. The number of unemployed people reached 5,639,500 at the end of March, with the unemployment rate hitting 24.4%, the national statistics agency said. The figures came hours after rating agency Standard & Poor’s downgraded Spanish sovereign debt. Official figures due out on Monday are expected to confirm that Spain has fallen back into recession. Earlier this week, the Bank of Spain said the economy contracted by 0.4% in first three months of this year, after shrinking by 0.3% in the final quarter of last year. Other figures released on Friday showed that Spanish retail sales were down 3.7% in March from the same point a year ago, the 21st month in row sales have fallen. In the first three months of the year, 365,900 people in Spain lost their jobs. The country has the highest unemployment rate in the European Union and it is expected to rise further this year. The rate has risen sharply since April 2007, when it stood at 7.9%. “The figures are terrible for everyone and terrible for the government…Spain is in a crisis of huge proportions,” Foreign Minister Jose Manuel Garcia-Margallo said. The new government has announced reforms to the labour market, including cutting back on severance pay and restricting inflation-linked salary increases, that it hopes will ease the problem. These measures have angered unions, which have organized widespread general strikes in protest. The government has also introduced drastic spending cuts designed to reduce its debt levels and meet deficit targets agreed with the European Union. These cuts are contributing to Spain’s economic contraction. “In Spain today, a cycle similar to Greece is starting to develop,” said HSBC chief economist Stephen King. “The recession is so deep that when you take one step forward on austerity, it takes you two steps back.” –BBC