Not since the days of Franco has Spain suffered such high unemployment rates. The country was virtually a feudal, agrarian economy the last time almost six million workers were unemployed.

This year Spain is preparing for another year of recession. Output is expected to fall after the economy worsened in the final three months of 2012 and the housing crash that wrecked the country's banks showed no signs of abating. Factory and energy production figures on Friday are expected to show industrial output was down 6% year on year in January. Average house prices remain 36% below their 2008 peak.

Youth unemployment, which has spurred thousands of young people to protest in Madrid's main squares, has climbed to 56.5% without hitting a ceiling.

In a barely disguised jibe at Spain's employment laws, Mario Draghi, the head of the European Central Bank, said countries that put "all the weight of flexibility" on young people would continue to suffer problems. Spain's youth unemployment figure is surpassed only by Greece.

As well as its troubled banking sector, Spain suffers from a lack of competitiveness inside the eurozone and excessive household and company debts. Under pressure from Brussels, the government's answer to its own escalating debts has been to impose harsh austerity measures.

Unlike Italy, which has almost balanced its budget after a clampdown on spending, Spain is expected to spend more than it receives in taxes in 2013 in breach of eurozone rules. The government deficit is expected to fall to 4.5% after hitting 6.3% last year. Only in 2014 is it expected to fall within Brussels' 3% ceiling.

Prime minister Mariano Rajoy has faced strong criticism after he saved some of his toughest austerity measures for regional governments, which run the health and education services, while preserving the budgets of many departments run from Madrid.