MADRID, Spain (PNN) - October 26, 2012 - Spanish unemployment climbed to a record in the third quarter as a deepening recession left one in four workers jobless, adding pressure on Prime Minister Mariano Rajoy to seek a second European bailout.

Unemployment, the second highest in the European Union after Greece, rose to 25.0% from 24.6% in the previous quarter, the National Statistics Institute said in Madrid today. That is the highest since at least 1976, the year after dictator Francisco Franco’s death led Spain to democracy.

Nearly three months after the European Central Bank offered bond buys to lower its borrowing costs, Spain is still playing for time. Economy Minister Luis de Guindos said on Oct. 23 that the recent improvement in funding conditions shows they depend on investors’ perception of the euro’s future rather than domestic issues.

Since the ECB’s offer, the yield on Spain’s 10-year benchmark bond has dropped more than 200 basis points from a July 25 euro-era high of 7.75%. It was at 5.67% at 8:41 a.m. in Madrid while the spread with similar German maturities was 411 basis points, compared with a 650 basis-point record in July.

In line with a 25% median forecast in a Bloomberg survey of 7 economists, joblessness has nearly tripled since 2007, before a real estate-fueled boom ended. The euro-area average is 11.4%, according to Eurostat.

“It’s unlikely that the government’s forecasts will be met next year as fiscal consolidation accelerates,” said Sara Balina, an analyst with Madrid-based consultant firm Analistas Financieros Internacionales, or AFI, that counts public administrations among its clients.

“Third-quarter data were better than expected because they were distorted by a temporary increase in demand before a value- added tax increase and by exports that may suffer from weakening growth in the euro zone,” she said.

Economists surveyed by Bloomberg forecast the economy will shrink 1.4% next year, compared with the government’s 0.5% prediction. Unemployment is seen rising above 27% by 2014, while Rajoy expects joblessness to start falling next year.