Spain's government today approved an additional €5 billion for public works programmes in a new bid to stimulate the recession-hit economy.

The fund would be in addition to €8 billion allocated in November 2008 for infrastructure projects and which led to the creation of 421,00 jobs since April but which is now winding down, the government said.

Work financed by the new fund would begin on January 1, Deputy Prime Minister Maria Teresa Fernandez de la Vega said.

Spain entered recession in late 2008. Its economy, Europe's fifth biggest, has been hit particularly hard by the world economic crisis after a decade-long boom driven by the construction industry came to an end.

The stimulus package last year has not prevented a rise in the unemployment rate, which the National Statistic Institute said earlier today stood at 17.9% at the end of September.

The government has forecast that the jobless rate will remain high, closing the year at 17.9% and rising to 18.9% in 2010.