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Spain: One in four is unemployed

August 31, 2012: 11:23 AM ET

Spain suffered the highest level of joblessness in the eurozone in July, as overall unemployment in the region held steady at a record high.

One out of every four citizens in Spain is unemployed, according to the latest statistics from Eurostat. The situation is even worse for young Spaniards. The unemployment rate for those under 25 years old is now approaching 53%.

Spain has been dealing with high unemployment for years. The nation's jobless rate has been above 20% since May 2010, according to data from the European Central Bank. In July, the rate rose to 25.1%.

The Spanish economy slipped back into recession during the first quarter and activity has continued to deteriorate. Spanish gross domestic product declined 0.4% in the second quarter.

Related: Spanish economy shrinks

Spain's woes stem largely from a major property bust a few years ago that left the nation's banks saddled with a mountain of bad debt. Spain has requested up to €100 billion in loans from the eurozone bailout fund to recapitalize solvent banks, while insolvent banks will be consolidated in a so-called bad bank.

Meanwhile, the Spanish government has seen its borrowing costs surge to unsustainable levels as investors in the international bond markets worry it may need to be bailed out. The yield on Spanish 2-year notes rose above 6% in July before falling back in August.

Spain is also dealing with a growing number of regional governments that need to be rescued. This week, Catalonia became the latest region to officially ask for help from the €18 billion fund Madrid set up to aid its 17 autonomous regions.

The troubles in Spain have raised worries that the government could have its credit rating cut to junk status by one of the global credit rating agencies. Moody's said Thursday that its review of Spain's credit rating, which it launched in June, will continue through the end of September.

Of course, Spain is not the only eurozone nation struggling with high unemployment.

Related: Everything you need to know about where things stand

In Greece, unemployment rose to 23.1% in May, the most recent month for which data were available. Cyprus also saw its unemployment rate edge up to 10.9% in July from 10.6% the month before.

Overall, the unemployment rate for the 17-nation eurozone held steady at 11.3% in July, with an estimated 18 million people out of work, according to Eurostat. That's up from 15.9 million in July 2011.

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Ben Rooney
Ben Rooney
Staff writer, CNNMoney

Ben Rooney is a staff writer for CNNMoney. He covers the European debt crisis and other international finance stories, in addition to writing about stocks, bonds, investing and other Wall Street-related news. Follow Ben on Twitter: @ben_rooney

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