Spain fights recession, deficit and market doubts

  Spain’s fight against a job-destroying recession is entering a second year, a central bank report showed Tuesday, even as Madrid struggles to curb a bloated public deficit.

The economy shrank at a quarterly rate of 0.4 percent in the third quarter, the same pace as in the previous three months, the Bank of Spain said, citing provisional data.

“The Spanish economy continued on a path of contraction which began a year earlier,” it said.

Financial Year

If confirmed, the figures would mean that the Spanish recession, which has left one in four workers unemployed, is moving into a second year at a relentless pace.

Budget Deficit

The eurozone’s fourth-largest economy, which emerged from the previous recession only at the end of 2010, began gently shrinking in mid-2011 and has slumped in every quarter since by as much as 0.5 percent.

Spain has agreed a 100-billion-euro ($125 billion) rescue loan for its banks, of which it plans to use only 40 billion euros.

But world markets now anticipate a broader sovereign bailout, after the European Central Bank in early September outlined plans to make unlimited bond purchases to bring down stricken states’ borrowing costs.

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