Spain's First-Quarter Unemployment Hits 17.4%

Spanish unemployment soared to 4 million in the first quarter, almost doubling in a year as the recession destroys jobs more quickly than anywhere else in Europe, official data showed on Friday.

The unemployment rate of 17.4 percent announced by the National Statistics Institute, up from 13.9 percent a quarter earlier and already higher than the Bank of Spain's forecast of a maximum of 17.l percent for the year will be a major embarrassment for Spain's Socialist government.

The government, which has launched a 70 billion euro ($92.20 billion) fiscal stimulus programme, had said unemployment would peak at 4 million, but, with that figure already reached with the end of the recession seemingly far away, analysts said the peak looks set to be far higher.

"The momentum is clearly there for something well above 20 percent, it's odds on really. My own forecast is that it gets to something around about 23 percent," said economist at BNP Paribas, Dominic Bryant.

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Bryant saw Spain's economy, long healthily dependent on construction and private foreign financing, continuing to contract sharply in 2010 before stagnating in 2011.

The unemployment figure, more than double the European average, comes as Prime Minister Jose Luis Rodriguez Zapatero has indicated he could boost public spending further despite warnings from economists that Spain is reaching its fiscal limits.

"Room for further fiscal stimulus is very limited," said economist at 4Cast Jose Garcia Zarate. "Things are going to get worse before they get better. We're looking at a whole generation of labor and education overhaul."

The International Monetary Fund said on Wednesday Spain should be wary of extra fiscal stimulus measures and must curb spending to cut a ballooning budget deficit expected to rise above 8 percent of gross domestic product this year.

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