Spanish economy contracts 0.1 per cent

The Spanish economy contracted by 0.1 per cent in 2010 as the government sought to reign in spending and reduce the national deficit.

Sell-offs and reforms to the labour code and pension system have all been adopted by the socialist government in an attempt to regain the confidence of investors who are needed to help finance the country's debt.

Official data released by the National Statistics Institute shows that the economy performed better than the expected 0.3 per cent decline, but despite the growth turning positive towards the end of the year it was not enough to make a positive impression.

The news is sure to be of interest to those looking to buy property in Spain, with the market unlikely to enter into full recovery until the economy gets back on track.

Prime minister Jose Luis Rodriguez Zapatero has forecast only moderate growth of 1.3-per cent this year, with the unemployment rate likely to remain at an elevated level of 19.3 per cent.

As a result, the government recently announced what it called a "shock plan" to reduce unemployment, including financial incentives to businesses to recruit people aged under 30 and assistance for those out of work for long periods of time.

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