Spain leads EU with record unemployment level

John Springford of the CER, says the nature of Spain's labour market, with a large chunk of workers on precarious, short-term contracts, compounds the country's problems. "It is looking extremely bleak. The eurozone is projecting that we are going to see a downturn of about 2.2 per cent in Spain. And this seems quite optimistic, to be honest, because the level of indebtedness in the private sector is so great. So, the government's caught up in this very difficult position," Springford said.

But Springford joins a number of analysts in criticizing the measures. "In many ways it has been self-defeating. If you look at Greece and Ireland, we have seen very, very large falls in GDP. We have seen an increase in debt for the whole economy and we have had, in Greece's case, a second round of a bailout - and that is something that may well be possible in Ireland. So the strategy has quite large risks," Springford said.