Spain unemployment rate shoots to 26%, highest since 1975

MADRID (AFP) - Spain's unemployment rate surged to a modern-day record of 26 per cent in the final quarter of last year, as nearly six million people searched in vain for work in a biting recession.

The jobless rate climbed from a rate of 25.02 per cent the previous quarter, reaching the highest level since Spain returned to democracy after the death in 1975 of General Francisco Franco.

The result shattered even the modest expectations of Prime Minister Mariano Rajoy's government, which had been forecasting an unemployment rate of 24.6 per cent by the end of last year.

An extra 187,300 people joined the jobless queue, which reached a total of 5.97 million people, a National Statistics Institute report showed. There were 8.33 million households in which every worker was unemployed, it said.

Spain, the fourth-biggest economy in the 17-nation single currency area, has embarked on a programme of spending cuts and tax rises to save 150 billion euros (S$245 billion) between last year and 2014, prompting mass street protests.

The government has vowed to lower the public deficit from the equivalent of 9.4 per cent of annual gross domestic product in 2011 to 6.3 per cent last year, 4.5 per cent this year and 2.8 per cent next year.

In recession since the end of 2011, the Spanish economy contracted by about 0.6 per cent in the latest quarter, its steepest dive in more than three years, according to a separate report this week by the Bank of Spain.