Staring into the abyss: Spanish unemployment hits record highs

 

July 27, 2012 – MADRID – Spanish unemployment hit its highest level in the second quarter since the Franco dictatorship ended in the mid-1970s, succumbing to a crisis of confidence among business and consumers that looks likely to escalate as the country’s recession drags on. The jobless rate rose to 24.6 percent from 24.4 percent in the three months to March, the National Statistics Institute said on Friday. The number of unemployed Spaniards hit 5.7 million, giving the country the highest proportion of people out of work in the European Union. That figure continues to rise as a government battling to stave off a sovereign bailout piles on fresh austerity measures while the economy shrinks. “It’s another example of the dire position the economy is in, and with the economy unlikely to expand anytime soon, and probably more likely to fall deeper into recession, things are only going to get worse,” economist at Capital Economics Ben May said. Friday’s headline figure – below a Reuters forecast of 24.9 percent – was the highest since current records began in 1976, the year after Francisco Franco died and the country began its transition to democracy. Spain’s economy has stagnated or been in recession since the beginning of 2008 after the labor-heavy property sector stalled as a glut of cheap credit dried up. The latest slump, which began in the first quarter, is expected to last into next year while the government said last week it does not expect unemployment to fall much below 22 percent until 2015 at least. Almost a third of all the euro zone’s jobless are in Spain, with young people the worst hit. According to figures from EU statistics agency Eurostat, half of the country’s people aged under 26 and available for work are unemployed. Consumer and business confidence has been pummeled by concerns that Spain, which had to seek an up to 100-billion-euro credit line for its banks and is trying to rein in its highly-indebted regions’ finances, may need a full bailout. Deep spending cuts and hefty tax hikes to reduce one of the euro zone’s highest public deficits have sparked country-wide protests, from massive, largely peaceful marches by the unemployed and public workers to violent clashes between miners and the police. Anger is growing at the country’s politicians and the banks, kept afloat with public money while basic services like health and education are being dramatically cut. –Yahoo News