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Spanish Unemployment Hits 17.4 Percent

Unemployment rate reaches 17.4 percent, with nearly two million jobs lost over the past year, as the country that was once a model of growth in Europe struggles with recession.

MADRID (AP) -- Spain's unemployment rate has soared to 17.4 percent, with nearly two million jobs lost over the past year, as the country that was once a model of growth for much of Europe now struggles with recession, government figures showed Friday.

The jobless rate as of the end of March was up 3.45 percentage points from the end of 2008, the National Statistics Institute said. In the first quarter of this year alone, 802,000 jobs vanished and the total number of unemployed now stands at a historic high of 4.0107 million.

That tops the 3.586 million jobless in Germany, which has Europe's largest economy and a population almost twice the size of Spain's.

"It is a terrible figure," Octavio Granado, secretary of state for social security, told Spanish National Television. He said the first quarter of any year is traditionally bad for employment in Spain and 2009 is expected to be the worst stretch of the economic downturn.

"So we are in the epicenter of the crisis. We are in the eye of the perfect storm," Granado said.

Spain had been one of Europe's great economic success stories, posting more than a decade of solid growth on the back of a red hot construction industry. But its economy has collapsed over the past year or two due to the bursting of a real estate bubble and tighter credit conditions brought on by the international financial crisis.

Spain has gone from being one of the European Union's largest net creators of jobs to having its highest unemployment rate.

Finance Minister Elena Salgado called the new figures "bad, and worse than expected." She said the government will strive to guarantee benefits for the jobless, saying there is a "human reality" behind the dry numbers that try to describe Spain's economic woes.

Spain is in a technical recession after gross domestic production shrank in the last two quarters of 2008, and the government says it expects the economy to contract 1.6 percent this year. The IMF paints an even grimmer picture, predicting a fall of 3.0 percent in Spanish output this year.

Prime Minister Jose Luis Rodriguez Zapatero's Socialist government has launched a rescue package that features billions of euros (dollars) in spending on public works and measures aimed at encouraging banks to resume lending to businesses and consumers.

On Wednesday Zapatero said that in a few months this package would start making a dent in the jobless rate but for now Spain remains "immersed in the sharp phase of the crisis."

For instance, in the first quarter of this year the number of Spanish households in which everyone is unemployed -- in Spain it is common for young people to live with their parents well into their 30s -- has jumped by about 240,000 and now totals about 1.1 million.

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