Spanish unemployment tops 6 million

MADRID Thu Apr 25, 2013 7:33am EDT

People wait in a queue to enter a government-run employment office in Madrid April 25, 2013. REUTERS/Sergio Perez

People wait in a queue to enter a government-run employment office in Madrid April 25, 2013.

Credit: Reuters/Sergio Perez

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MADRID (Reuters) - More than six million Spaniards were out of work in the first quarter of this year, raising the jobless rate in the euro zone's fourth biggest economy to 27.2 percent, the highest since records began in the 1970s.

The huge sums poured into the global financial system by major central banks have eased bond market pressure on Spain, but the cuts Madrid has made in spending to regain investors' confidence have left it deep in recession.

Unemployment - 6.2 million in the first quarter - has been rising for seven quarters and the latest numbers will fuel a growing debate on whether to ease off on the budget austerity which has dominated Europe's response to the debt crisis.

"These figures are worse than expected and highlight the serious situation of the Spanish economy as well as the shocking decoupling between the real and the financial economy," strategist at Citi in Madrid Jose Luis Martinez said.

The collapse of a property boom driven by cheap credit has seen millions in the construction sector laid off since 2009 and private service sector, worth almost half gross domestic product, has followed as Spaniards tightened purse strings and investment plummeted.

The malaise has been made worse by billions of euros in state spending cuts and tax hikes to reduce one of the euro zone's highest deficits and convince nervous markets Spain can control its finances.

Spain and Italy's costs of borrowing hit their lowest in more than two years this week and EU officials have begun to talk openly of easing up on deficit targets.

Prime Minister Mariano Rajoy said earlier this week that a new reform plan, to be announced on Friday, would not include more austerity measures in an effort to calm increasingly desperate Spaniards and reassure investors the country will soon be able to grow.

Protests have become commonplace across the country and thousands of police have been drafted in to Madrid to handle a march on Parliament on Thursday.

But few believe the government's plans will be ambitious enough to restart the ailing economy and create jobs. The International Monetary Fund sees Spanish unemployment at 26.5 percent next year.

(Additional reporting by Manuel Maria Ruiz; Editing by Julien Toyer)

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Comments (2)
hginandon wrote:
“the shocking decoupling between the real and the financial economy” is the real failure of today’s economists and politicians. They have forsaken democracy (the general society) for financial WHAT?…the stock markets rise, profits come before the welfare of the general public, the wealth and prosperity of the FEW (those that feed the lobbies and the politicians) . There must be at least one economist in the world who can see the big picture. Where is he, or she?

Apr 25, 2013 5:02am EDT  --  Report as abuse
VonHell wrote:
Lets see if i get it…
The financial market invested money as cheap credit in the housing market. Creating a false demand and a false rise in property value plus a mass of sub prime mortgages…
The gov in other hand did nothing… because gov income was rising from overvalued tax property and jobs were been created for a nunsustainable industry that would collapse at any moment… to make matters worse the gov began overspending in benefits and public white elephants counting on funds that would stop coming soon after the bubble exploded…
And now all blame austerity aka the spending cut due to the simple fact they run out of money, credit and solidarity from the other eurozone members…

Apr 25, 2013 6:00am EDT  --  Report as abuse
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