Business

Spain's jobless rise in September

Wednesday, October 03, 2012    

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MADRID, Spain - The number of people registered as unemployed in Spain rose by a little under 80,000 people to 4.71 million in September as the summer tourism season came to an end and businesses let workers go, the Labor Ministry said Tuesday.

The country is in its second recession in three years with an overall unemployment rate of nearly 25 per cent. The country is debating whether to seek international assistance to help it manage its debts.

Spain has already been granted a (euro) 100 billion (US$128 billion) loan from its eurozone partners to help its troubled banking sector and is under pressure to take up the European Central Bank on its offer to buy unlimited amounts of its debt to help bring down the country's borrowing costs.

Prime Minister Mariano Rajoy, who has pushed through nine straight months of tough austerity measures, met Tuesday with the leaders of Spain's 17 regional governments about the economic crisis and the latest austerity measures. The regions, some of them heavily indebted, are being forced to push through government cutbacks affecting cherished national health care and education.

Also Tuesday, ratings agency Moody's Investors Service said it would announce the outcome of a review of Spain's sovereign debt rating this month. Moody's had been due to issue the report by the end of September, with many analysts predicting Spain's rating would be reduced to junk.

That would hurt Spanish markets because many pension funds and banks would have to sell Spain's bonds from their portfolios and desist from buying them at auction. That, in turn, would force Spain to pay higher rates to borrow money, further hurting its finances.

Moody's said it "is continuing to assess a number of factors, including Spanish banks' capital needs, the nature and size of support mechanisms, the recently released 2013 budget plan and the consequences for the euro area's crisis management framework of the further advancement of a banking union."

—AP

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