Spain jobless rate hits new high
Friday, 26 October 2012 11:06
Spanish unemployedThe unemployment rate in Spain is the highest in the eurozone

About a quarter of people in recession-hit Spain are unemployed, new figures have shown.

The unemployment rate rose to 25% in the third quarter, from 24.6% in the previous three months, Spain's National Statistic Institute said.

Among workers aged 16-24, the jobless rate was flat at about 52%.

The figures confirm those by the EU statistics agency, which has said that unemployment in the eurozone is at a high of 18.2 million.

"In the space of just five years, unemployment in Spain has risen from 8% to now just over 25%," said the BBC's Tom Burridge in Madrid. "In parts of southern Spain, one in three of those looking for a job can't find one."

"An increase in the number of people out of work means less money circulating in a recession-hit Spanish economy. It also makes it harder for the Spanish government to balance its finances, as it pays more out in unemployment benefits, and takes less revenue in."

Spain is trying to restore confidence among international investors in Madrid's ability to repay its debts, which have been made harder by the fact that Spain is currently in a deepening recession.

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Spain's banks funded the construction bubble, and because the property market crashed, those loans turned bad, leading to a eurozone bailout for some Spanish banks in June”

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The Spanish government has found itself in financial difficulty since the 2008 global financial crisis caused a big crash in the country's over-heated property market, and many fear that it will need a full bailout on top of the banking loan that has already been agreed.

It has introduced highly unpopular spending cuts and tax rises as it attempts to reduce the country's deficit.

But with a shrinking economy and unrest in the country, reducing the deficit with further austerity measures may prove a difficult task for the government.

The government is still hoping to avoid requesting a bailout from the eurozone rescue funds, but many think this is inevitable.

At least five regions of Spain's 17 have requested help from Madrid's 18bn-euro Regional Liquidity Fund, including Valencia and Catalonia.

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