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Spain economy 'will get worse'

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The unemployment rate in Spain for those under the age of 25 is 52 per cent (AP)

The unemployment rate in Spain for those under the age of 25 is 52 per cent (AP)

The unemployment rate in Spain for those under the age of 25 is 52 per cent (AP)

Spain's grinding economic misery will get worse this year despite the country's request for a European financial lifeline of up to 100 billion euro (£80.8 billion) to save its banks, prime minister Mariano Rajoy has said.

A day after the country conceded it needed outside help following months of denying it would seek assistance, Mr Rajoy said more Spaniards will lose their jobs in a country where one out of four is already unemployed.

"This year is going to be a bad one," Mr Rajoy said in his first comments about the rescue since it was announced by his economy minister.

The conservative prime minister added that the economy, stuck in its second recession in three years, will still contract the previously predicted 1.7% even with the help.

Small businesses and families starving for credit will eventually get relief as the funding props up banks and they increase lending, but Mr Rajoy did not offer guidance on when.

Spain became the fourth, and largest, of the 17 countries that use Europe's common currency to request a bailout - a big blow to a nation that a few years ago took pride as the continent's economic superstar only to see it become the hot spot in the eurozone debt crisis.

Its economy is the eurozone's fourth largest after Germany, France and Italy.

Across the country, Spaniards reacted with a mixture of anger and relief at the news.

The amount of the rescue fund, if all of it is tapped, amounts to 21,000 euro (£16,990) of new debt for each person in the nation of 47 million where the average annual salary for those with work is about the same amount and the unemployment rate for those under the age of 25 is 52%.

The country is already reeling from deep austerity cuts Mr Rajoy has imposed over the last six months that have raised taxes, made it easier to hire and fire workers and cut deep into cherished government programmes including education and national healthcare.

PA