The UK economy unexpectedly contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession.

It is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955.

But the figures could still be revised up or down at a later date, because this figure is only the first estimate.
GDP measures the total amount of goods and services produced by a country.

Recession-hit Spain’s unemployment rate stood at twice the eurozone average in the third quarter, virtually stable compared to the previous three months at 17.93 percent, official data showed on Friday.

In the second quarter, the jobless rate was 17.92 percent, up from 17.36 percent in the first three months of the year.

There were 4.123 million people registered as unemployed at the end of September, 1.524 million more than a year earlier, the National Statistics Institute said.

Spain’s socialist government on Friday approved an additional EUR 5.0 billion (USD 7.5 billion) for public works programmes in a new bid to stimulate the recession-hit economy.

The fund would be in addition to EUR 8.0 billion (USD 12 billion) allocated in November 2008 for infrastructure projects and which led to the creation of 421,00 jobs since April but which is now winding down, the government said.

Five billion Euro will be placed in a new fund for employment and local sustainability

The cabinet approved a series of measures at their meeting on Friday which they say will create jobs for 200,000 long term unemployed.

A 5 billion € fund was approved which will be used to fund local Town Halls under the scheme, which intends to create longer term and better qualified jobs than the earlier Plan E employment creation program.
It will be called the Fund for Employment and Local Sustainability, and will be established from January 1.

Spain’s jobless are taking longer to find a new job, and when they do, their salary is often lower than in their previous employment, according to a study by staffing firm Adecco published Monday.

“One of the immediate effects of the economic downturn of 2008 was an increase of almost two months the average time for workers to find employment,” it said in a statement.

Spain doesn’t feel like a country with an unemployment rate of 19pc. Bars, shops and restaurants are full and only 3pc of mortgages have gone sour. What gives?

Unemployment benefits in Spain are very generous and family support networks are stronger. But the Spanish may also be falling back on a less attractive tradition – dodging taxes. Anecdotes abound of people working in side jobs while collecting unemployment benefits. A study by the University of Linz estimates illicit activity will account for 19.5pc of Spain’s GDP by 2010

The eurozone trade balance with the rest of the world slipped into deficit in August after a big surplus in July, as exports fell by more than imports.

The deficit was 4bn euros ($6bn; £3.7bn), compared with a surplus of 12.3bn euros in July. In August last year, the deficit was 11bn euros.

The reason was a 5.8% fall in exports from July, compared with a more modest fall in imports of 1.3%.

The Bank of England’s rate-setting committee has kept UK interest rates on hold at 0.5% for the seventh successive month, as widely expected.

The Bank also said it would continue with its programme of pumping £175bn into the economy, which it said would likely take another month to complete.

Interest rates remain on hold as data continues to show that any UK economic recovery remains patchy.

European economies are shaking off recession but analysts warn the pace of recovery could vary greatly from country to country, revealing a North-South divide, and could be undone by a squeeze on credit.

Economists show near unanimity that official stimulus measures, renewed consumer and business confidence and beefed up production have combined to halt the worst downturn since the 1930s.

The number of people unemployed in recession-hit Spain rose in September for the second month in a row, the government said on Friday.

There were 3.709 million job seekers in the country last month, up 80,367, or 2.2 percent, from the level in August, the employment ministry said.

The figure confirms a rise in unemployment that began in August, when the number of jobless jumped 2.4 percent, after three months of declines.

Spanish consumer prices fell for the seventh month running in September, dropping 1.0 percent over 12 months, official figures showed on Tuesday.

In August, prices plunged 0.8 percent.

That followed a fall of 1.4 percent in July, 1.0 percent in June, 0.9 percent in May, 0.2 percent in April and 0.1 percent in March, which was the first 12-month drop since the INE statistics office began tracking inflation in 1961.

The pound has touched a five-month low against the euro after comments by the Governor of the Bank of England that a weak currency would be good for the economy.

Sterling has fallen as low as 1.09 euros, its lowest level since April.

The figure is good news for manufacturers, whose exports are now cheaper for foreign consumers.

But it is bad news for tourists hoping to catch a bit of autumn sun on the continent.

The number of people out of work in the UK has risen to its highest level in 14 years, official figures have shown.

Unemployment increased by 210,000 to 2.47m in the three months to July, taking the jobless rate to 7.9%, the Office for National Statistics said.

Claims for unemployment benefit in August grew by 24,400 from July to 1.61m, the highest since May 1997.

The eurozone is emerging from recession, according to the latest forecast from the European Commission.

“The economy appears to be at a turning point,” the commission said.

But because the economy contracted by more than expected in the first half, the overall annual forecast has remained unchanged at -4%.

Separately, official figures showed that eurozone industrial production fell by 0.3% in July compared with the previous month.

Spain’s government said on Friday that it would strive to prevent job losses at the Opel factory in Spain following the announcement by General Motors that it is selling the automaker.

The government “is attempting to ensure that jobs are not lost in Spain” over the move, Finance Minister Elena Salgado told national radio.

Under a deal unveiled on Thursday, General Motors agreed to sell a 55-percent stake in Opel to Canadian auto parts maker Magna and to state-owned Russian lender Sberbank. GM will retain 35 percent and employees the rest.

The Spanish government has announced that taxes will be raised to pay for the soaring budget deficit as the nation struggles with the highest unemployment rate in Europe

Jose Luis Rodriquez Zapatero, the Socialist prime minister, told parliament on Wednesday that a “moderate rise” in taxes was necessary to “to guarantee sufficient capacity to meet the needs of providing social protection and investing in infrastructure.”

The Spanish government said Wednesday it would impose tax hikes equal to 1.5 percent of total output next year as it struggles with a deep recession and Europe’s highest jobless rate.

Socialist Prime Minister Jose Luis Rodriguez Zapatero told parliament the “moderate rise” in taxes was needed “to guarantee sufficient capacity to meet the needs of providing social protection and investing in infrastructure”.

About 10,000 unemployed immigrants have taken advantage of a Spanish programme to compensate them if they return to their country of origin, Labour Minister Celestino Corbacho said Monday.

The figure includes the number of jobless immigrants who have taken advantage of the so-called “voluntary return programme” as well as their family members, he said during an interview with Onda Cero.

The Spanish government said Thursday it expects to see a 10 percent drop this year in the number of foreign tourists in the country, the world’s third most popular holiday destination.

“We expect a fall in international tourism of around 10 percent this year,” Secretary of State for Tourism Joan Mesquida told Spanish national radio.

However, he noted that domestic tourism had held up, even though the country entered a recession in late 2008.

The European Central Bank (ECB) has kept interest rates on hold at 1%.

The decision not to change rates was widely expected, as the ECB waits to see the full impact of the measures it has already taken on the economy.

Eurozone rates were cut from 1.25% to a record low of 1% in May this year, but are still among the highest for developed economies.