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Spanish recession effects to linger

Spanish recession effects to linger
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Spain’s Prime Minister Jose Luis Rodriguez Zapatero has said the worst of the country’s recession is over but with plenty of hard times still ahead.

The Spanish economy has been in recession for a year and is expected to be one of the slowest in the European Union to emerge from the slump. Addressing parliament, Zapatero said there was good news about the resilience of the economy: “I’d like to tell you that the ratings agency Moody’s has just announced that it’s not going to downgrade Spain’s sovereign credit rating, and it remains one of those countries with the top Aaa rating. Moody’s stresses that Spain has proved to be more resistant than was envisaged. So, Moody’s says – and I quote “Spain is no longer in the vulnerable category.” But that was the only good news. The government admits unemployment will likely rise to 20 percent this year of the working population and the deficit will reach 10 percent of gross domestic product while the economy will contract by about four percent. Government spending has shot up to pay unemployment benefit with Spain’s jobless totals at more than double the EU average after the collapse of the housing market and the end of the construction boom. Zapatero said next year’s budget “will be the most austere Spain has seen in the recent years and spending will continue to be reduced.”