Subscribe: RSS Feed | Twitter | Facebook | Email
Home | Contact Us

Spanish Unemployment Hits 24.4% !!!

Posted by Larry Doyle on April 27, 2012 11:26 AM |

Think Spain is speeding on its way over the proverbial cliff? Let’s emphasize the “speeding”.

Continuing on our focus today of issues within the EU, Spain — merely the 9th largest economy in the world — announced today that its unemployment rate hit 24.4%. For purposes of context, that rate stood at a relatively mild 7.9% in 2007. 

OUCH…24.4% unemployment is a whole lot of pain!!! 

The BBC offers further insight on this disaster in writing, Spanish Unemployment Hits 5.64 Million

The number of unemployed people reached 5,639,500 at the end of March, with the unemployment rate hitting 24.4%, the national statistics agency said.

The figures came hours after rating agency Standard & Poor’s downgraded Spanish sovereign debt.

Official figures due out on Monday are expected to confirm that Spain has fallen back into recession.

Earlier this week, the Bank of Spain said the economy contracted by 0.4% in first three months of this year, after shrinking by 0.3% in the final quarter of last year.

Other figures released on Friday showed that Spanish retail sales were down 3.7% in March from the same point a year ago, the 21st month in row sales have fallen.

In the first three months of the year, 365,900 people in Spain lost their jobs.

The country has the highest unemployment rate in the European Union and it is expected to rise further this year.

“The figures are terrible for everyone and terrible for the government… Spain is in a crisis of huge proportions,” Foreign Minister Jose Manuel Garcia-Margallo said.

The new government has announced reforms to the labour market, including cutting back on severance pay and restricting inflation-linked salary increases, that it hopes will ease the problem.

These measures have angered unions, which have organised widespread general strikes in protest.

The government has also introduced drastic spending cuts designed to reduce its debt levels and meet deficit targets agreed with the European Union. These cuts are contributing to Spain’s economic contraction.

“In Spain today, a cycle similar to Greece is starting to develop,” said HSBC chief economist Stephen King.

“The recession is so deep that when you take one step forward on austerity, it takes you two steps back.”

Talk about a downward death spiral. There is obviously very real human pain involved in this Spanish disaster. That pain and how it is addressed financially, politically, socially, and otherwise has very real implications across the EU and the global financial landscape as a whole.

Navigate accordingly!!

Larry Doyle

Please subscribe to all my work via e-mail, an RSS feed, on Twitteror Facebook.

I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • James: recommended

    Interesting analysis and thoughtful research from Nomura

    Spanish downgrade: further consequences

    – Spain’s downgrade by S&P to BBB+ from A has implications for haircuts on ECB collateral. If the other rating agencies move to a similar level, the current ECB framework calls for an additional 5% haircut across all maturities. Spain is now rated largely in line with Italy

    – The weakness of the eurozone’s growth outlook is undermining the efforts of many sovereigns to rein in budget deficits, thereby highlighting the self defeating nature of the fiscal compact as currently defined. Including the political impact, this has potential to lead to further downgrades.

    – We expect the euro area debt crisis to get significantly worse before we see any meaningful combination of policy responses. We continue to believe that any policy response sufficient to provide a path to resolving the crisis needs to involve ECB QE of a form that is pre-announced and in a size which is commensurate to the scale of the problems faced. Absent a proportional policy response, Euro breakup remains more probable than possible at this juncture.

    Nomura Research/Rates Insights






Recent Posts


ECONOMIC ALL-STARS


Archives