In his bar overlooking the Ebro river as it rushed beneath the elegant footbridge designed by the renowned architect Zaha Hadid, Rafael Moreno glumly surveyed the handful of customers picking at their lunchtime food.

"We have already had to lay people off," he said. "They were meant to start building offices here, but I can't see it happening any time soon. This crisis is going to last."

Moreno's bar, Bocados, opened last year with riotous success amid the euphoria of Zaragoza's international Expo fair. The city was booming, and so was Spain. It was the country that was creating most jobs and attracting most immigrants in Europe and it was celebrating its fifteenth consecutive year of economic growth.

Now the empty, rubbish-strewn Expo site, with its pavilions half-gutted and Hadid's expensive bridge fenced off to the public, is a symbol of Spain's precipitous fall from a bricks-and-mortar boom to a bust that has given it the developed world's highest unemployment.

In a country destroying jobs at a breathtaking rhythm, once flourishing Zaragoza and the region around it is declining even faster than the national average - with unemployment up 75% in a year. The shock has already sent protesters on to the city's streets in their tens of thousands. "If this isn't fixed: Strike! Strike! Strike!", they chanted at a recent rally.

With Spain's property developers queuing up to file for bankruptcy and employees at a local General Motors factory waiting to discover whether their jobs will survive a global restructuring plan to be announced this week, the mood becomes bleaker by the day.

Similar stories are being told across recession-hit Spain, with economists predicting that unemployment will rise from its present level of 14% to 20% by the end of the year.

"I've got one more month's work and then no idea what will happen," said Angel López, an electrician who came to Zaragoza to help build the Expo pavilions and hotels. "I will go abroad if I have to. No one is going to build here any more."

Spain's construction sector, fuelled by cheap credit both for Spaniards and for foreigners seeking holiday homes, had swollen to twice the size of that in other countries. As the bubble grew, building sites sucked in unskilled workers, helping to multiply its immigrant population eightfold in 10 years and encouraging young people to swap school for easy money.

A property crash, already on its way before the global financial meltdown started, has sent those workers spilling into the dole queues. Behind them they have left plunging property prices and a stock of empty, unsold new homes that is now close to 1.5m.

The new unemployed are now dragging everyone from bank tellers to waitresses behind them. "The last time I was unemployed was 15 years ago," said waitress Sonia Gascón, 38, huddling in the early-morning cold with 60 other people as she waited for an employment office to open. "Construction work stopped, then the car factory slowed down and suddenly people stopped coming through the restaurant doors," she said. "My son is 16 and I can't see what future he has got." Gascón estimated that her dole money would last for two years and then she would fall back on her family - the traditional Spanish comfort at times of crisis.

But not everyone has that luxury. Already in Zaragoza, and elsewhere, they are talking of "the new poor".

"I'm ashamed to be here, because I've worked on building sites all around Spain for the past 15 years," said Juan, a neatly dressed Ecuadorean waiting outside the soup kitchen run by the Nuestra Señora del Carmen parish church, who did not want his real name used. "But I haven't worked for six months and I've got a wife and two children to keep." Workers inside the kitchen said things were becoming dramatically worse. "We can only feed 122 people at a time," said social worker Lucía Capilla, adding that most of the newcomers were legal immigrants. "In November we started handing out food in bags because we could not get everyone into the dining room. Yesterday we had to hand out 30 bags." Charity workers blame a creaking social support system and mortgages taken out to buy overpriced houses for the emergence of a new kind of poverty. Crucially, they say, Spain's 10% of immigrants cannot turn to their families for support.

Among Zaragoza's many woes is the General Motors car factory in nearby Figueruelas, where production of Corsa and Minerva cars has dropped dramatically. "We won't know what will happen until GM presents its plan for the whole company on Tuesday," said shop steward Juan José Arceiz. "This crisis has caught us when our own company was already in crisis."

The Socialist government of prime minister José Luis Rodríguez Zapatero has given Zaragoza's town hall €115m (£102m) to spend on emergency public works as part of a nationwide €11bn attempt to create jobs. Zapatero wants 25,000 small projects up and running in the spring. "But that is only temporary," said Luisa Fernanda Rudi, the regional boss of the opposition People's party, which wants lower taxation and looser employment regulations. "We need reforms."

Even Pedro Solbes, the finance minister, has recognised that there are limited funds in the bank to pay for public works and the huge new bill for unemployment benefit.

That is not news that Joan Bakos, 46, a truck driver who sold his home in Romania to emigrate seven years ago, wants to hear. He is now living off €400 a month but has mortgage payments of €800.

"Everything has gone from white to black in just a few months," he said as he prepared for a gloomy silver wedding get-together on Valentine's Day yesterday. "I can't see any way out."

Eurozone crisis

GDP fall in the fourth quarter of 2008:

Germany

-2.1%

Steepest fall since reunification in 1990

France

-1.2%

Not yet officially in recession

Italy

-1.8%

The worst slump since 1980

Spain

-1.0%

Now has EU's highest jobless rate

Portugal

-2.0%

May be death knell for Socialist government