May 22, 2013
Budget cuts push Spain jobless to 25%
Spain's unemployment rate hit a record high in the third quarter, with one in four out of work and more expected to lose their jobs in 2013 as the next phase of government cutbacks kicks in.
At exactly 25 percent, Friday's official number was the highest since the Franco dictatorship ended in the mid-1970s, and gives fresh impetus to calls by labor unions for a general strike next month.
That action is part of an increasingly vocal protest campaign against successive waves of spending cuts and tax hikes that, critics argue, has only served to put more people out of work rather than getting to grips with Spain's economic crisis.
"Weaker growth than expected, coupled with austerity, could easily see unemployment hit 26 percent next year," said Silvio Peruzzo, economist at Nomura in London.
The rate was 24.6 percent in the second quarter, and analysts had expected Friday's National Statistics Institute data to show a rise to 25.1 percent.
The number out of work stood at 5.8 million.
Of European Union countries only Greece, mired in an even more brutal recession than Spain and battling to stave off bankruptcy, has a higher jobless rate.
Friday's data puts further pressure on the government as it debates whether to seek international aid while it battles to bring down the public deficit in line with European Union demands in a recession that shows no sign of letting up.
Government forecasts show the economy contracting next year by 0.5 percent, but economists in a Reuters poll this week said they expect it to shrink three times faster.
"There is a debate over the optimistic growth outlook for next year by the government, which is given little credibility," Nomura's Peruzzo said.
Spain's financing needs are largely covered for this year, and its cost of borrowing from debt markets has eased significantly since August thanks to the European Central Bank's promise to buy the country's bonds should it call for financial help.