Spain In 'Crisis' After Dire Unemployment Figures Follow Debt Downgrade

Spain's unemployment rate has jumped to more than 24 percent, the highest level of any nation in the 17-country euro zone, government figures revealed Friday.

The alarming data comes only one day after credit ratings agency Standard & Poor's downgraded the country's debt rating from A to BBB+ (the same level as Italy), citing a worsening budget deficit, worries over the banking system and poor economic prospects.

The ratings agency, which left its assessment of Spain at negative, added that another downgrade could follow in the near future.

The double-blow to recovery hopes follow the Bank of Spain's confirmation earlier this week that the country had entered a technical recession.

The figures are terrible for everyone and terrible for the government, Foreign Minister Jose Manuel Garcia-Margallo told Spanish National Radio, according to the AP.

Spain is in a crisis of enormous magnitude.

According to official figures, unemployment jumped from 22.9 percent in the fourth quarter of 2011 to 24.4 percent in the first quarter of 2012, after a further 365,900 people lost their jobs in the first three months of the year.

The number of unemployed people under 25-years-old was also up, rising from 48.5 percent in the previous quarter to 52 percent, bringing Spain's total unemployed population to 5.6 million.

Raj Badiani, an economist at London-based Capital Economics, commented: Given [that] the [Spanish] economy is expected to be in contraction territory throughout 2012, employment is likely to shrink for a fifth straight year during the year, coupled with an increasing risk that further jobs could be lost in 2013. Specifically, a tough multi-year budget deficit-reduction plan will entail a cull of public-sector jobs in both 2012 and 2013, while private-sector firms continue to seek to minimize labor costs in line with poorer output prospects and higher than expected energy costs.

Spain has been the focus of European debt woes in recent weeks, as the euro zone's fourth largest economy struggles to push through austerity measures in the face of mass unemployment and popular protests.

If Spain were to follow a similar route as Greece and require a bailout, investors fear the euro zone nations would struggle to absorb its €734 billion ($969 billion) debt.