Spanish jobless rate tops 26% at end of 2013

Thursday 23 January 2014 16.45
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Spain's jobless rate rose to 26.03% in the last three months of the year
Spain's jobless rate rose to 26.03% in the last three months of the year
European Commission's Olli Rehn said that the Spanish programme had worked
European Commission's Olli Rehn said that the Spanish programme had worked

Spain's unemployment rate rose above 26% in the final quarter of 2013, official data shows, as the euro zone's fourth-largest economy emerged only haltingly from a long recession.

After five years of stop-start recession, Spain began to show economic growth in the third quarter of 2013 but activity has been too weak to deliver a significant number of new jobs.

Spain's unemployment rate rose to 26.03% in the last three months of the year from 25.98% in the previous quarter, the National Statistics Institute said.

The deterioration, though minor, spoilt an otherwise brightening picture for the battered economy, which grew by 0.1% in the third quarter of 2013, signalling the end of a two-year downturn.

Spain's Prime Minister Mariano Rajoy's conservative government estimates that the economy grew by a still-meagre 0.3% in the final quarter of 2013, though official figures have yet to be released.

The government had tipped an unemployment rate of 26.6% of the workforce for 2013, dipping to 25.9% in 2014.

The International Monetary Fund has warned that Spain faces five more years with unemployment rates topping 25% unless it enacts yet more reforms including measures to help firms slash wages instead of axing staff.

Meanwhile, Spain has formally exited its bailout programme, which saw €100 billion being made available to the country to help deal with problems in its banking sector. 

The 18 month-long programme came to an end at midnight, with the country having drawn down around €41 billion of the loan in return for undertaking banking sector reform and a range of austerity measures.

Spain has followed Ireland in exiting its bailout programme without a precautionary credit line and yesterday sold €10 billion worth of 10-year bonds at a yield of 3.8%.

The European Commission's vice president Olli Rehn said that the Spanish programme had worked, adding that the country's "financial markets have stabilised, banks have increased liquidity, their solvency position remains comfortable, deposits have been rising and access to funding markets has been improving."

He said the programme had repaired and reformed the country's financial sector and helped to create a "sound basis" for recovery.

However he warned that Spain still faced a number of challenges, including its high level of unemployment.