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One in four jobless, downgraded Spain admits 'crisis'

At least 1.7 million households now have no wage earner, an increase of almost 10% since the start of the year.

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Spanish leaders warned on Friday that their country is mired in a "crisis of huge proportions" as the government reeled from the latest downgrade of its credit rating and was faced with record unemployment.

The unemployment rate in the eurozone's fourth largest economy hit 24.4%, the highest in the industrialised world, in the first quarter of this year, signalling that one in four Spaniards is out of work. Among under-25s, the rate climbed to 52%.

At least 1.7 million households now have no wage earner, an increase of almost 10% since the start of the year.

Retail figures for March, meanwhile, showed sales fell for a twenty-first consecutive month as the country's deep recession bit down on consumer spending.

"The figures are terrible for everyone and terrible for the government," said Jose Manuel Garcia-Margallo, the foreign minister. "Spain is in a crisis of huge proportions."

The gloomy figures piled pressure on Madrid after Spain's government debt was downgraded by Standard and Poor's (S&P), one of the triumvirate of global credit rating agencies. The country's rating was cut by two notches from A to "BBB+" with a negative outlook on Thursday night, reflecting a loss of confidence in its abilities to shoulder its national debts.

The tide of bad economic data from Spain is fuelling worries that the country will follow Greece, Ireland and Portugal into requiring an international bailout.

S&P said it did not see Spain defaulting on its debt repayments, as its rating still remains investment grade.

None the less, the yields, or implied interest rates, on 10-year Spanish government bonds surged to 6%, seen as a psychologically important barrier for the markets, before moving down slightly to around the 5.9% mark.

As well as weakening finances, Spain is faced with a fragile banking sector.

Central bankers in Madrid said that the country's lenders are saddled with problem property loans which total €184 billion (£150 billion), around 60% of their property portfolios. S&P has warned that it sees "an increasing likelihood that Spain's government will need to provide further fiscal support to the banking sector".

Separately, Madr said it should just manage to exit recession next year, with growth of just 0.2%.

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