Spain's sickly economy faces a crisis of huge proportions said Foreign Minister Jose Manuel Garcia-Margallo as unemployment hit its highest level in two decades and Standard and Poor's weighed in with a two-notch downgrade of the government's debt.
Spain's unemployment rate shot up to 24% in the first quarter, the highest level since the early 1990s and one of the worst jobless figures in the world. Retail sales slumped for the twenty-first consecutive month.
The figures are terrible for everyone and terrible for the government ... Spain is in a crisis of huge proportions, he said in a radio interview.
Spain has slipped into its second recession in three years putting it back in the centre of the euro zone debt crisis storm.
Likewise Standard & Poor's cut its credit rating on Spain by two notches, citing expectations the government finances will deteriorate even more than previously thought as a result of a contracting economy and an ailing banking sector.
The ratings agency, which downgraded Spain to BBB-plus from A, also put a negative outlook on the credit and said Spain's situation could deteriorate further unless ambitious measures were taken at European level.
We think risks are rising to fiscal performance and flexibility, and to the sovereign debt burden, particularly in light of the increased contingent liabilities that could materialize on the government's balance sheet S&P said in a statement.
It was the first downgrade for Spain since Prime Minister Mariano Rajoy took office in December.