The economy of Spain is expected to worsen this year despite the financial lifeline of close to $125 billion the European Union is giving the country to help saves its financial institutions, Mariano Rajoy Spain’s Prime Minister said on Sunday.
One day after Spain conceded it must have outside help following a number of months of denying it would have to seek assistance, the prime minister said many more people in Spain would lose their job where already 1 out of every 4 are unemployed already.
Rajoy warned that 2012 would be a very hard year for the country. The conservative Rajoy added that Spain’s economy, stuck in a second recession in only three years, would shrink even more than the 1.7% previously predicted even with the new help by the EU. Families and small businesses that have been starving to get credit will eventually find it, as the funding will help banks increase their lending.
Spain became the fourth of 17 countries that use the common currency euro to ask for a bailout. Spain is the largest of the four countries to ask for assistance and it is a big blow to the country’s pride, as it was once the economic superstar of the continent.
Spain has the fourth largest economy in the eurozone behind Germany, Italy and France. Spaniards reacted to the news of the bailout with mixed reactions. Relief was mentioned by many, while others were angry at what was needed in relief. The relief amounts to over $27,000 of additional debt for every person in the country. Unemployment for people under 25 in the country is over 52%.