The Spanish government said Monday it missed its 2011 budget-deficit target by a wide margin, highlighting the difficulties in closing one of the euro zone's largest budget gaps as the country's economy entered a new downturn, The Wall Street Journal reported. The Spanish budget ministry said Spain's total public-sector budget deficit stood at 8.51% of gross domestic product last year, above the 8% estimate the new government of Prime Minister Mariano Rajoy gave in December. Spain had been aiming for a budget deficit equal to 6% of GDP in 2011.

Spain's jobless claims shot up 4% in January from December to 4.59 million, a sign that the euro zone's fourth-largest economy is still shedding jobs at a record rate, The Wall Street Journal reported. All sectors posted more claims but the rise was sharpest for services at 5.1%. In construction, weighed down by a four-year property slump, the number of residents registered as job seekers rose 2.1%. Compared with the same period a year ago, overall claims rose 8%.

Banco Santander of Spain announced on Tuesday that its net profit fell nearly 98 percent, to 47 million euros, during the final three months of last year, as the bank dealt with the downturn in the Spanish real estate market and the European debt crisis, The New York Times DealBook blog reported. The drop in quarterly profit weighed on the bank’s annual earnings, which fell 35 percent, to 5.35 billion euros ($7 billion), in 2011.

A new downturn for the Spanish economy has led to a sharp escalation of its unemployment rate, data showed Friday, lending new urgency to Prime Minister Mariano Rajoy's plans to overhaul one of the region's largest ailing economies, The Wall Street Journal reported. According to Spain's National Statistics Institute, the number of jobless Spaniards rose by 295,300 in the fourth quarter from the third, to 5.27 million. That is equal to 22.85% of the work force, compared with 21.52%, more than twice the average unemployment rate of 10% for the 27 members of the European Union.

Spanair SA, the Spanish airline involved in a crash that killed 154 people in 2008, ceased operations after Qatar Airways Ltd. halted takeover talks and the regional government refused to provide further funding, Bloomberg reported. The final flight landed at about 10 p.m. Friday, the Barcelona-based carrier said in an e-mailed statement, citing “a lack of financial visibility for the coming months.” The closer may affect as many as 23,000 passengers this weekend and will see 120 flights canceled, spokeswoman Sandra Melendez said.

After years of decrying as incompetent the former Socialist government of José Luis Rodríguez Zapatero, Spain’s business leaders and fund managers are having their first twinges of doubt about the Popular party administration they elected in November to replace it, the Financial Times reported. Mariano Rajoy, PP prime minister, had raised expectations he would enact radical economic reforms to save Spain from the eurozone sovereign debt crisis and the ignominy of a bail-out such as those of Greece, Ireland and Portugal.

France and Spain have cleared major funding tests, steadying volatile markets and giving some much-needed cheer to the embattled eurozone, The Guardian reported. Paris and Madrid secured €13bn (£10.8bn) of funding between them in bond auctions at significantly lower interest rates than last year, despite a downgrade by the ratings agency Standard & Poor's last week that sparked fears of a run on the euro and the collapse of several banks. Stock markets rose on the news, with the FTSE 100 finishing the day up 38 points at 5741.15, while the German Dax rose 1%.

Spain says it expects its banks to set aside up to €50bn in further provisions on their bad property assets as part of a new round of reforms for the country’s financial sector, the Financial Times reported. Luis de Guindos, economy minister in the centre-right government that took office two weeks ago after defeating the Socialists, said on Wednesday it was essential that the banks clean up their balance sheets without imposing a burden on the treasury. The €50bn figure, equivalent to about 4 per cent of Spain’s GDP, is higher than private expectations by bankers.

In a new sign of a Spain's deepening financial crisis, the regional government of Valencia on Wednesday said it was a week late in repaying a €123 million ($160 million) debt to Deutsche Bank AG, The Wall Street Journal reported. A spokeswoman for the Valencia government said the region had assistance from Spain's central government in Madrid in finding a solution to its liquidity crunch, but said Madrid didn't provide extra funds or a guarantee. The spokeswoman said the central government was "sensitive" to Valencia's difficulties, but declined to elaborate.

Registered unemployment in Spain, where almost half of young people are out of work, rose for a fifth month in December as the euro area's fourth-largest economy contracted, the Irish Times reported. The number of people registering for unemployment benefits rose 1,897 to 4.42 million, the labour ministry in Madrid said in an e-mailed statement today. In November, it surged 59,536. Spain's economy contracted in the final months of the year as tourism and exports, the drivers of its first-half recovery from a three-year slump, weakened, the Bank of Spain said on December 29th.