karlpejera: Spain unemployment tops 5.3m and set to get worse

Biyernes, Enero 27, 2012

Spain unemployment tops 5.3m and set to get worse

The conservative government of Mariano Rajoy has started to quietly beg the EU to ease up on deficit targets which require savage spending cuts

Spanish unemployment broke through the 5-million barrier on Friday as the new government of Mariano Rajoy began to quietly beg the European Union to ease up on deficit targets that are sending the country hurtling back into recession.

Spain, which already boasted Europe's worst unemployment rate, recorded 350,000 people losing their jobs in the last quarter of 2011.

That rate now stands at 22.8% of the population and is set to worsen as Rajoy's conservative People's party government pursues a ?40bn (�33bn) budget adjustment, most of it in spending cuts, to meet the EU's deficit target of 4.4% this year.

With a record 5.3 million unemployed, Spain faces a spiral of decline. The IMF has already predicted that the economy will shrink by 1.7% this year, with a further decline in 2013.

While Rajoy, who met German chancellor Angel Merkel in Berlin on Thursday, publicly maintains his target of reducing the deficit to 4.4% from more than 8% last year, his ministers are letting it be known that they want the EU to ease up on deficit targets which require severe adjustments.

Rajoy himself has pointed out that the EU's target for 2011 supposed not only that last year's deficit would be 6%, but also that growth this year would reach 2.3%.

"We need growth predictions from Brussels and that is when we will start negotiating with them on Spain's stability programme," the finance minister, Luis de Guindos said.

Almost 1.5m Spanish households now have no wage earner, with 3.5 million people joining the dole queue over the past four-and-a-half years. Southern Andalucia has a 31% unemployment rate, while 35% of immigrants and 39% of under-25s are jobless.

"Harsh adjustment policies not only fail to solve the problem, they can make it worse," warned C�ndido M�ndez of the General Workers' Union.

Further evidence that public austerity programmes were damaging the wider economy came from figures on company closures.

Around 35,000 companies folded in the second half of the year ? a third of all those to have shut since Spain's economy ran into trouble at the end of 2008.

Much of the spending cuts have to come from regional governments, who provide basic services such as health, education and social services.

Spain's pharmaceutical companies said regional governments were now taking 525 days to pay bills for medicines provided to hospitals, with ?6.3bn outstanding.

Meanwhile, the chairman of the Caixa savings bank, Isidre Fain�, predicted further gloom in the housing market, in which up to 700,000 new-build homes remain unsold after a housing bubble burst several years ago.

He predicted that house prices, which have dropped around 30% since their peak, could fall to 50% or 60% of their top value before recovering.

Giles Tremlett