|Spain 'in huge crisis' as unemployment hits record levels Spanish leaders warned that their country is mired in a "crisis of huge proportions" as the government reeled from the latest downgrade of its credit rating and was faced with record unemployment. |
By Emma Rowley, and Fiona Govan
5:17PM BST 27 Apr 2012
The unemployment rate in the eurozone's fourth largest economy hit 24.4pc, the highest in the industrialised world, in the first quarter of this year, signalling that one-in-four Spaniards is out of work. Among under-25s the rate climbed to 52pc.
At least 1.7m households now have no wage earner, an increase of almost 10pc since the start of the year.
Retail figures for March, meanwhile, showed sales fell for a 21st consecutive month, as the country's deep recession bit down on consumer spending.
"The figures are terrible for everyone and terrible for the government," said Jose Manuel Garcia-Margallo, the foreign minister. "Spain is in a crisis of huge proportions."
The gloomy figures piled pressure on Madrid after Spain's government debt was downgraded by Standard and Poor's (S&P), one of the triumvirate of global credit rating agencies. The country's rating was cut Thursday night by two notches from A to "BBB+" with a negative outlook, reflecting a loss of confidence in its abilities to shoulder its national debts.
The tide of bad economic data from Spain is fuelling worries that the country will follow Greece, Ireland and Portugal into requiring an international bailout.
S&P said on Friday that it does not see Spain defaulting on its debt repayments, as its rating still remains investment grade.
None the less, the yields, or implied interest rates, on 10-year Spanish government bonds surged to 6pc, seen as a psychologically important barrier for the markets, before moving down slightly to around the 5.9pc mark.
As well as weakening national finances, Spain is faced with a banking sector that is in fragile shape.
Central bankers in Madrid said that the country's lenders are saddled with problem property loans that total €184bn (£150bn), around 60pc of their property portfolios. S&P has warned that it sees "an increasing likelihood that Spain's government will need to provide further fiscal support to the banking sector".
Separately, the Spanish government said that the country should just manage to exit recession next year, with growth of just 0.2pc.