Unemployment in Spain fell to lowest level in nearly six years, which is a new sign that the economy is moving forward, even when politicians fail to form a government that would put an end to the unprecedented 7-month political impasse. In the second quarter the unemployment rate fell to 20% and beat the forecasts of economists.
Overall, the number of unemployed people decreased by 216,700 to 4.57 million for the quarter, which is usually characterized by recruitment due to holiday season, as well as during the sales sector retail. Over the past 12 months the Spanish economy has created 434,400 new jobs after recovery continues, despite the political uncertainty that seized the nation after two parliamentary votes within half a year.
After negotiations to form a government have reached an impasse, King Philip will meet with leaders of the main political parties late Thursday, including a caretaker prime minister Mariano Rajoy. The monarch is looking for a better way for the candidate to form a majority and win the vote of confidence needed to become prime minister, and to end political deadlock. Rajoy has said he would refuse the invitation of the king to form a government if he does not count on sufficient support from the opposition parties to ensure his victory on the vote of confidence.
Without government Spain will face a lot of challenges. The clock is ticking for the adoption of next year’s budget before the deadline of 30 September. Madrid have yet to determine the expenditure ceiling, which is the first step for the adoption of the budget.
Despite the obstacles caretaker government expects the economy to grow by 2.9% this year, compared to the previous assessment of 2.7%.
On Friday, the new data on economic growth will probably show that the Spanish economy grew by 0.7% in the second quarter. Although this represents a slight decrease compared to the reported in the first quarter, growth would be more than twice faster than expected expansion of the Eurozone economy.
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