The Paris-based Organisation for Economic Cooperation and Development (OECD) predicted on Monday that the Spanish economy will grow by only 0.3 percent next year after contracting in the last quarter of this year. 

It said this will push unemployment  – already more than double the average in the European Union at 21.5 per cent  –even higher to an average of 22.9 percent in 2012, with over five million people out of work. However, Spain will have plenty of company, according to the organisation, which warned that the UK and the eurozone could be entering a recession. As a result it has cut its global growth forecast.

Pier Carlo Padoan, the deputy secretary-general and chief economist at the OECD said "the situation is of particular concern in the eurozone" and warned of "contagion in the euro area".

Despite the OECD’s gloomy prediction, the Spanish stock market has begun to pick up, apparently encouraged by signs that the EU countries may be finally reaching an agreement on how to tackle their current economic woes. Meanwhile, the incoming Partido Popular government has stressed its commitment to the goals agreed with the European Commission to reduce the country’s deficit.  PP secretary general María Dolores de Cospedal assured reporters on Monday that there "should be not the least doubt that Spain will meet its commitments". She said that despite pressure from both inside and outside the country, Prime Minister-elect Mariano Rajoy cannot reveal his plans for any spending cuts until “he knows just how big the deficit is”, adding that the outgoing Socialist government had still not supplied any figures.

Sr Rajoy has spoken to more than 20 world leaders since the November 20th general election and is scheduled to meet business representatives and the unions later this week to discuss spending cuts with them. He will be sworn in as Prime Minister by King Juan Carlos on December 22nd.

Source:www.thenewsonline.es