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Spanish recession deepens

Spain’s economy sank deeper into recession at the end of last year.

Between October and December GDP shrank 0.7 percent from the previous quarter.

That was the fastest decline in a year as households slashed spending in response to government cutbacks and high unemployment.

The weak end to 2012 gave a preliminary full-year figure of minus 1.4 percent. That was much worse than the previous two years and the fourth quarter number worried economists.

Fiona Cincotta, of City Index, said: “This particular figure was really quite important because it is the first European figure of growth this year, so it really will be setting expectations for the year, so investors will have been looking quite closely at how Spain was performing. Although we were expecting a contraction, the level of contraction I think was a little bit more surprising than we were expecting.”

Austerity driven unemployment in Spain now stands at 26.6 percent of the workforce with the country in its second recession in three years following the collapse of the once-booming property sector.

The Madrid government has said it expects growth to restart before the end of the year, but many economists remain doubtful.

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