Post date: Apr 27, 2012 3:16:21 PM
Spain is facing a "crisis of huge proportions" according to its foreign minister, as unemployment hit its highest level since the early 1990s and the government's debt was downgraded by two notches by Standard and Poor's.
SPAIN-DOWNGRADE REAX - Waiting at the job centre is becoming a fact of life for Spaniards of all ages.
Unemployment shot up to 24% in the first quarter - the highest level since the early 1990s and one of the worst jobless figures in the world.
Over 5 and a half million Spaniards are out of work.
SOUNDBITE: DUMITRU MAGDALENA, UNEMPLOYED MOTHER, SAYING
"I keep on looking. I've taken anything that's come up but there's not much around. I have to live day to day."
Meanwhile, retail sales have slumped for the twenty-first consecutive month.
This latest batch of data comes on the back of a two-notch downgrade of Spain's credit rating by Standard and Poor's.
The Spanish Foreign Minister says the country is facing a "crisis of huge proportions".
The yield on Spanish 10-year-debt rose to over 6 percent on the downgrade.
And European shares fell on the open, but soon regained ground.
Alpesh Patel from Praefinium Partners says the Spanish government has to get the economy growing again.
Alpesh Patel, Praefinium Partners, saying
"The key thing they need to do is have an internal devaluation, by which I mean cut the salaries of the public sector. Not just hold salaries, but cut them say by about 5%, because that will at least keep tax revenues coming in, reduce or at least maintain employment levels where they are, and help cut that budget deficit."
Spain has slipped back into its second recession in three years.
The shrinking economy gives Madrid little hope of meeting tough public deficit targets this year, despite harsh cuts.
And that puts it firmly back in the centre of the debt crisis storm.
Joanna Partridge, Reuters