Alarming new figures today revealed a record one in four people out of work in
Spain between July and September -- but experts say the worst is yet to come.
The country's prime minister Mariano Rajoy is struggling to avoid a full-blown bailout with swingeing austerity measures, but an unemployment rate of 25 percent underlined the human cost of the cuts with 5.8 million on the dole.
The jobless count is the highest since at least 1976 -- the year after General Franco's death. A euro 60 billion (pounds sterling 48 billion) programme of spending cuts and tax hikes is set to wreak more havoc on the jobs market next year. Analysts are sceptical over Madrid's forecast of a relatively mild 0.5 percent contraction for the economy next year as Spain brings down the deficit, with independent forecasts suggesting a decline three times as big.
Nomura economist Silvio Peruzzo said: "There is a debate over the optimistic growth outlook for next year by the government, which is given little credibility. Weaker growth than expected, coupled with austerity, could easily see unemployment hit 26 percent next year.
The government expects the economy to shrink 1.5 percent this year, and the outlook is for joblessness to stay above 24 percent until 2014. Of all the eurozone nations only Greece has higher unemployment, although Spain's borrowing costs have been eased by the ECB.
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