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Prime Minister Mariano Rajoy is in no hurry to apply for a politically humiliating financial rescue that would kickstart an ECB bond-buying program and ease financing costs. But the worsening economy, along with spreading civil unrest, may force his hand.

Numbers published on Tuesday added to evidence that the country is trapped in a ’stagflationary’ spiral of shrinking growth, high inflation and high unemployment.

Gross domestic product shrank for the fifth straight quarter between July and September, dropping 0.3 percent, while consumer prices rose by 3.5% year-on-year in October, the two sets of National Statistics Institute data showed.

Elected just under a year ago on an austerity ticket, Rajoy has signed off on a belt-tightening program worth over 60-billion euros through to the end 2014 to cut the public deficit. But the spending cuts have dented investment while tax rises have hit consumers’ pockets and driven prices higher.

The cutbacks have also led to increasingly frequent protests focused on Madrid and fuelled already strong separatist sentiments, notably in the powerful northeastern province of Catalonia.

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ECONOMIC ’MIRAGE’

The eurozone’s fourth largest economy is at the centre of the bloc’s debt crisis due to concerns the government cannot control its finances. Many investors view the 2013 budget, which aims to cut the deficit to 4.5% of GDP from over 9% last year, as based on overly optimistic economic forecasts.