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| More than a quarter of Spanish workforce are jobless | More than a quarter of Spanish workforce are jobless |
| (2 months later) | |
| Almost six million people in recession-plagued, austerity-hit Spain are out of work, taking the jobless rate to more than 26% of the workforce. | Almost six million people in recession-plagued, austerity-hit Spain are out of work, taking the jobless rate to more than 26% of the workforce. |
| The figures released on Thursday are proof that Spain has yet to hit bottom in a downturn that analysts say will continue for months as the country faces a lost decade for its economy. In southern Spain, two out of every three young people are unemployed. | The figures released on Thursday are proof that Spain has yet to hit bottom in a downturn that analysts say will continue for months as the country faces a lost decade for its economy. In southern Spain, two out of every three young people are unemployed. |
| Almost 700,000 Spaniards lost their jobs during 2012 – a grim figure beaten only in 2009, early in the current crisis when 1.2 million Spaniards were put out of work. One in 10 Spanish homes with people of working age have no breadwinner. | Almost 700,000 Spaniards lost their jobs during 2012 – a grim figure beaten only in 2009, early in the current crisis when 1.2 million Spaniards were put out of work. One in 10 Spanish homes with people of working age have no breadwinner. |
| The picture is even worse for those living in the south-western province of Cadiz, where unemployment averages a record 40% over all age groups. | The picture is even worse for those living in the south-western province of Cadiz, where unemployment averages a record 40% over all age groups. |
| Predictions for this year suggest even more jobs will be shed as prime minister Mariano Rajoy's People's party government embraces further austerity and the European Union sets tough budget deficit targets. | Predictions for this year suggest even more jobs will be shed as prime minister Mariano Rajoy's People's party government embraces further austerity and the European Union sets tough budget deficit targets. |
| On Monday, the International Monetary Fund revised down its already grim prediction, saying it expected the country's economy to shrink by 1.5% this year. | On Monday, the International Monetary Fund revised down its already grim prediction, saying it expected the country's economy to shrink by 1.5% this year. |
| With both private and public consumption likely to slump further, analysts' average prediction for the end-of-year unemployment rate is 26.5%. | With both private and public consumption likely to slump further, analysts' average prediction for the end-of-year unemployment rate is 26.5%. |
| That is especially bad news for the young, with more than 55% of those under 25 and not studying already unemployed. In the populous southern region of Andalusia, 65% of under-25s are jobless. | That is especially bad news for the young, with more than 55% of those under 25 and not studying already unemployed. In the populous southern region of Andalusia, 65% of under-25s are jobless. |
| Despite the glum predictions for this year, the government insists Spain's recession will bottom out in 2013, with growth returning at the end of the year or in 2014. | Despite the glum predictions for this year, the government insists Spain's recession will bottom out in 2013, with growth returning at the end of the year or in 2014. |
| "Cuts have a negative short-term impact," junior finance minister Fernando Jiménez Latorre said on Thursday. But he added that recent reforms making it easier and cheaper to fire workers would eventually help create jobs in Spain. "Things will evolve less badly," he said. | "Cuts have a negative short-term impact," junior finance minister Fernando Jiménez Latorre said on Thursday. But he added that recent reforms making it easier and cheaper to fire workers would eventually help create jobs in Spain. "Things will evolve less badly," he said. |
| The EU is demanding that Spain end the year with a budget deficit equivalent to 4.5% of GDP – down from 7% or more last year. That will require at least €30bn (£25bn) of savings – through cuts or tax rises – which will further depress the economy. | The EU is demanding that Spain end the year with a budget deficit equivalent to 4.5% of GDP – down from 7% or more last year. That will require at least €30bn (£25bn) of savings – through cuts or tax rises – which will further depress the economy. |
| "We do need to reduce the deficit, but the EU should be more flexible about the deadlines," Josep Comajuncosa, of the ESADE business school in Barcelona, said. "Requiring a fast and drastic reduction of the public deficit could backfire. The deficit target should be pushed back one or two years." | "We do need to reduce the deficit, but the EU should be more flexible about the deadlines," Josep Comajuncosa, of the ESADE business school in Barcelona, said. "Requiring a fast and drastic reduction of the public deficit could backfire. The deficit target should be pushed back one or two years." |
| Rajoy's government is jubilant that borrowing rates have been falling just as this year's budget predicts that the country must find a further €9.7bn, almost 1% of GDP, for higher interest payments on a national debt that shot up last year. | Rajoy's government is jubilant that borrowing rates have been falling just as this year's budget predicts that the country must find a further €9.7bn, almost 1% of GDP, for higher interest payments on a national debt that shot up last year. |
| As borrowing costs fall, the chances of Spain having to ask for a eurozone bailout are reduced – allowing it to avoid harsher conditions like those imposed on neighbouring Portugal and saving some of Rajoy's already tattered public support. | As borrowing costs fall, the chances of Spain having to ask for a eurozone bailout are reduced – allowing it to avoid harsher conditions like those imposed on neighbouring Portugal and saving some of Rajoy's already tattered public support. |
| Analysts do not rule out a bailout, however, and warn that much will depend on whether bond markets continue to show confidence in Spain's ability to pay its debts. | Analysts do not rule out a bailout, however, and warn that much will depend on whether bond markets continue to show confidence in Spain's ability to pay its debts. |
| "We're further from needing a bailout than we have been in the past six months, but it would be irresponsible not to ask for one if the risk premium spikes," said Comajuncosa. "The government needs to get ready, financially and politically, for this possibility." | "We're further from needing a bailout than we have been in the past six months, but it would be irresponsible not to ask for one if the risk premium spikes," said Comajuncosa. "The government needs to get ready, financially and politically, for this possibility." |
| Spain has taken €40bn from eurozone rescue funds to clean out ailing banks weighed down by toxic real estate left-over from a burst housing bubble. | Spain has taken €40bn from eurozone rescue funds to clean out ailing banks weighed down by toxic real estate left-over from a burst housing bubble. |
| An estimated one million houses, mostly newly built, remain unsold in Spain and house prices are predicted to drop a further 20%. | An estimated one million houses, mostly newly built, remain unsold in Spain and house prices are predicted to drop a further 20%. |
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