The unemployment rate in Spain, already the highest in the European Union, rose to a 14-year peak of 21.29% in the first quarter, official data showed today.
Inflation in Spain, which is fighting weak growth and high debt, also rose in April to 3.5% from 3.3% in March, the highest figure since October 2008.
The figures were published by the national statistical institute Ine today against a background of severe strains on the Spanish economy arising from depressed economic activity and high public deficits and debt.
At the end of March the total of people registered as unemployed approached five million, at 4.91 million, Ine said. In the first quarter of 1997, the unemployment rate rose to 21.30%.
The lowest rate since then, when Spain experienced an economic boom arising from reforms and entry into the euro zone, was 7.95% in the second quarter of 2007 just as the financial crisis was brewing.
Against a background of high energy prices, in part caused by unrest in North Africa and the Middle East, the Bank of Spain recently raised its outlook for inflation to 2.9% for 2011 from 1.7% predicted previously. Inflationary pressures should ease later in the year and inflation in 2012 would be 1.5%, it said.
Spain, where people and businesses had been able to borrow at relatively low euro zone rates even though the economy was growing fast engendering a property bubble, has since been hit exceptionally hard by a collapse of the property market and economic slowdown in general.
It has the highest unemployment rates in the European Union and in the area covered by the Organisation for Economic Cooperation and Development. The Spanish rate is twice the average in the EU and OECD area.
The economy contracted by 3.8% in 2009 and shrank slightly by 0.1% last year. The government expects growth of 1.3% this year but the International Monetary Fund has forecast growth of just 0.6%.
The country is now fighting to avoid needing a debt rescue as has been the case for Greece and Ireland and as Portugal is now negotiating. In common with those countries it has announced deep spending cuts, and structural reforms of the economy including privatisations and a relaxation of job-protection laws.
The government recently raised its forecast for the unemployment rate this year to 19.8% from 19.3%, but expects it to fall from later this year to 18.5% next year, 17.3% in 2013 and 16% in 2014.
Meanwhile, the Spanish government today announced a deficit reduction target of 2.1% of output in 2014.
The government has already announced that it intends to reduce its public deficit to 3% of output in 2013.
The deficit last year amounted to 9.2% and the target for this year is 6% of gross domestic product, falling to 4% in 2012. The European Union ceiling is 3%.
Spain has announced radical measures to restructure its economy, including spending cuts, privatisations and a relaxation of job protection laws in order to cut the public deficit and improve the framework for growth.
