Spanish joblessness has reached record highs as the unemployment rate rises past 25 percent in the third quarter.
A report compiled by the National Statistics Institute in Madrid shows one out of four Spaniards are out of a job between the months of July and September, bringing the total number of unemployed to 5.8 million.
The official unemployment rate has risen to 25.02 percent, moving up from 24.6 percent recorded in the second quarter. This is the highest unemployment rate in 36 years.
Much of the cause of this high joblessness is a result of stagnant growth due to the recession and deepening debt crisis in the country. The strict austerity measures that must be adhered to as a result of meeting the terms of a bailout from the EU, the Spanish government has made cuts, which in turn has slowed growth even more. Many further job cuts are likely in the public sector, as well as cuts in health and education sectors.
According to the government forecasts, the Spanish economy is expected to contract 1.5 percent this year, and shrink by 0.5 percent in 2014.
The unemployment outlook is not expected to improve until after 2014, whereby the jobless rate is expected to start dropping below 24 percent .
Despite the dismal outlook on Spain, the Prime Minister Mariano Rajoy has yet to formally ask for a bailout from the EU. Many see a request for financial aid as a positive for Spain and for the euro because it will enable the European Central Bank to buy Spanish bonds, helping lower the government’s borrowing costs. As long as this uncertainty persists, this will continue to be a drag on the euro.