A bad day for Spain
The Spanish government announced yesterday the latest unemployment figures for the first quarter of 2012. They show that unemployment has risen to 24.4% – nearly one in four Spaniards are now out of work. It also showed that more than one in two (52%) of Spain’s youth are also unemployed.
If that was not bad enough, the ratings agency Standard and Poor’s has cut Spain’s credit rating from A to BBB+ with the outlook as negative. The move forced Spain’s bond yield over the danger mark of 6%, very close to the point where other countries including Greece, Portugal and Ireland were forced to seek bailouts.
Meanwhile, minister of economy and competitiveness, Luis de Guindos, has announced that the government will break a key manifesto pledge and raise indirect taxes including VAT, something they criticised the former socialist government for doing last year. The government has also announced a crackdown on benefit fraud although they are going to reduce the levies on employing people in the hope that that will make employers more willing to take on additional staff.