Spain has been handed its second S&P credit downgrade for the year, and data shows an economy in free fall. Retail sales fell for the 21st consecutive month, while Q1 unemployment soared to 24.44% of the working population, up nearly 2% from December. Spain’s economy is in desperate straits.
“The figures are terrible for everyone and terrible for the government… Spain is in a crisis of huge proportions,” Foreign Minister Jose Manuel Garcia-Margallo said in an interview.
Spain has slipped into its second recession in three years, putting it back in the center of the Eurozone debt crisis storm.
The government has already rescued a number of banks that were too exposed to a decade-long construction boom that crashed in 2008, and investors fear vulnerable lenders will be hit by another wave of loan defaults due to the slowing economy.
The government expects labour reforms passed in the first quarter that make it cheaper for firms to hire and fire to produce results next year. Many firms have taken advantage of the new rules to lay off more staff.
S&P said it was likely the government would have to put more funds into banks, and called on Eurozone countries to better manage the sovereign debt crisis.
Spain’s government is considering whether to create a holding company for the banks’ toxic real estate assets, as investors are not convinced by three rounds of cleanups and consolidations in the financial sector.
To read Tyler Durden article: Spanish Economy Crumbles: Unemployment Nearly 25%
- Spain Entering A Modern Great Depression in 2012 (doctoramarthacastro.wordpress.com)
- 22 Signs That The Collapsing Spanish Economy Is Heading Into A Great Depression (alexanderhiggins.com)
- 1/3 of unemployed in eurozone are from Spain (jobmarketmonitor.com)
- Spain’s jobless rate nears 25% as economic crisis worsens (cbc.ca)
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