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Spain’s unemployment jumps to record 26pc

PUBLISHED : Thursday, 24 January, 2013, 6:07pm
UPDATED : Thursday, 24 January, 2013, 6:31pm

Spain’s unemployment rate shot up to a record 26.02 per cent in the fourth quarter of last year, leaving almost six million people out of work, the National Statistics Institute said on Thursday.

The rate rose from 25.02 per cent in the third quarter as the country’s recession deepened.

Over the year, 691,700 more people lost their jobs, the institute said, adding that there were now 1.8 million households in which no one was employed.

Spain is in the throes of its second recession in just over three years following the collapse of its once-booming real estate sector in 2008.

Battling to reduce a swollen deficit and avoid a bailout, the year-old conservative government has made major financial and labour reforms and applied severe austerity measures such as cutbacks in wages and spending as well as tax increases.

The austerity measures are aimed at lowering the deficit, but are hurting the economy in the short-term, while the reforms will only help growth in the longer-term. That means the economy will suffer more before it recovers.

The central bank this week estimated that the recession deepened in the fourth quarter of last year, the economy shrinking by 0.6 per cent compared with the previous three-month period.

It was the sixth consecutive quarterly contraction. The economy contracted by 0.4 per cent in the third quarter.

The bank estimated economic activity was down 1.7 per cent in the fourth quarter from the year-earlier period and down 1.3 per cent for the whole of last year.

The statistics institute will announce official economic growth figures on January 30, while Europe’s main statistics office Eurostat unveils its estimate on February 14.

 

Spain’s recession deepened in the fourth quarter of last year, when the economy shrank by 0.6 per cent compared with the previous three-month period, according to preliminary estimates from the Bank of Spain on Wednesday.

It was the sixth consecutive quarterly contraction. The economy contracted by 0.4 per cent in the third quarter.

The bank said economic activity was down 1.7 per cent in the fourth quarter from the year-earlier period. And it estimates the economy shrank 1.3 per cent for the whole of last year.

Spain, with 26 per cent unemployment, is in its second recession in three years following the collapse of its once key real estate sector in 2008.

Also, on Wednesday, Finance Minister Cristobal Montoro told a parliamentary commission that a tax evasion amnesty aimed at boosting revenue for the country had put some 40 billion euros (US$53.3 billion) back into circulation in the Spanish economy, representing some 4 per cent of the country’s annual gross domestic product.

Montoro recently said the amnesty had reaped 1.2 billion euros in taxes – short of the government’s 2.5 billion euro target.

The amnesty, which came into effect last June and ended in November, has been much criticised as it was seen as helping tax evaders while Spaniards suffered cuts in wages and services because of the country’s economic crisis.

Opposition politicians pointed out that the figure released Wednesday meant the tax rate paid by those availing of the amnesty was three per cent, and not 10 per cent as originally announced by the government.

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