Spain's unemployment rate, already the highest in the European Union, has surged to nearly 14 percent, according to data on Friday which suggested the economy could be shrinking even faster than previously thought, reported reuters. Spain's decade-long economic boom has taken only a year to turn to bust, with the collapse of the property sector swiftly followed by a steep downturn in tourism and other services. In the fourth quarter, Spanish unemployment rose to 13.9 percent, or 3.2 million jobless, a 9-year high and above a 13 percent consensus forecast in a Reuters poll. Traditional links between the governing Socialist Party and Spain's powerful unions have until now helped minimise social protests as industries shed tens of thousands of workers a month. But cracks are beginning to show. "We have to start thinking about a recession which is going to be longer, deeper and more intense," said Jose Luis Martinez of Citigroup. "We are already working with a roughly 3 percent contraction of the economy this year," he said. The government has forecast the economy will contract by 1.6 percent in 2009 as Spain dives into its worst recession in 15 years, but many private economists regard this as optimistic. "We're extremely worried about Spain; we're probably the most bearish, in the European context, on that economy," said Sunil Kapadia, an economist at UBS.
