Forget Greece, With Nearly 19% Unemployment, Spain Should Have You Freaking Out


What would you guess unemployment among Spanish youth stands at?

The answer is in this depressing note from Brown Brothers Harriman strategist Marc Chandler, publisher by Rolfe Winkler:

Today Spain reported that its unemployment rate in Q4 rose to 18.8% from 17.9% in Q3.  The consensus was for a rise toward 18.5%.  The unemployment rate has doubled in the past two years.  As seems to be typical in  Europe, the unemployment [rate] is especially pronounced for young people. In Spain it’s 40%…

Cyclical forces and the €8 billion public works program pushed Spain’s deficit to around 11.2% of GDP last year according to the EC.  This is almost as large as Greece’s.  One key difference between the two in this context is that Spain’s debt to GDP is considerably lower than Greece, giving it perhaps greater chance to stabilise the debt/GDP ratios before they become ruinous.

In the face of such sobering news on the labour market today, Spain officials have felt compelled to indicate that they are considering increasing their efforts to cut the budget deficit quicker.  The government is contemplating proposals that will cut another €50 billion or 5% of GDP by 2013.

5% of GDP. That’s going to sting.

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