THE number of unemployed people in Spain reached 5,639,500 at the end of March, with the unemployment rate hitting 24.4%, with youth unemployment at over 50%, the Spanish national statistics agency has reported.
The issuing of the figures was preceded by the rating agency Standard & Poor’s downgrading Spanish sovereign debt to Triple B status, that is to a class of super-junk, driving up the interest rate for purchasing Spanish debt to 6%.
The Bank of Spain has already reported earlier this week that the Spanish economy had contracted by 0.4%, after shrinking by 0.3% in the final quarter of last year. The new figures to be issued next week are expected to show a further decline in production.
Spanish retail sales were down 3.7% in March from the same point a year ago, the 21st month in a row that sales have fallen.
In the first three months of the year, 365,900 people in Spain lost their jobs.
Stephen King, the Chief Economist at HSBC, described the situation in the following way: ‘The recession is so deep that when you take one step forward on austerity, it takes you two steps back.’
The issue clearly cannot be resolved by either inflation or deflation – it requires a socialist revolution.
‘The figures are terrible for everyone and terrible for the government…Spain is in a crisis of huge proportions,’ said Foreign Minister Jose Manuel Garcia-Margallo, stating the obvious.
The new government has announced ‘reforms; to cut wages, stop inflation-linked salary rises, slash redundancy pay, and to make it easier for bosses to sack workers.
Inflation and unemployment are rising while production and wages are falling rapidly.
Already in Spain there have been two general strikes. The last general strike, late in March, saw evening rallies in Barcelona and Madrid attract 900,000 and 800,000 people respectively.
The interest rate, or yield, on Spanish government bonds traded in the secondary market rose following the release of the unemployment figures and the S&P downgrade.
The yield on 10-year bonds rose to 6%, up from 5.81%, suggesting investors were becoming more wary of Spain’s ability to repay its debts.
The Greek and Spanish crises are part of an EU disaster chain across the whole continent.
On Friday, the interest rate that Italy has to pay, to borrow money from international investors, rose to 5.84% compared with 5.24% at a similar sale a month earlier.
S&P has predicted the Spanish economy will shrink by 1.5% this year, having previously forecast 0.3% growth.
US carmaker Ford has meanwhile reported lower quarterly profits following weaker sales in Europe and higher tax charges.
Ford, the second-largest US carmaker, said first quarter net income was $1.4bn (£862m), down from $2.6bn for the same quarter last year.
Ford said about half the drop was due to it paying a higher tax rate. Ford made a loss of $149m in Europe. The carmaker’s sales in Europe were down by 60,000. It also reported losses in Asia, Africa and South America.
Ahead in the EU, on May 6th, are the French and Greek elections and, later in May, the Irish referendum where the fiscal treaty is expected to be rejected.
These political events, and the reaction of the bankers and speculators to them, will topple the euro and the eurozone over the edge of the precipice.
There is only one way forward for the working class of the EU and that is to overthrow European capitalism and replace it with the Socialist United States of Europe.
