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MADRID, Spain — Spain"s grinding economic misery willget worse this year, despite the country"s request for aEuropean financial lifeline of up to 100 billion euros ($125billion) to save its banks, Prime Minister Mariano Rajoy saidSunday. A day after the country conceded it needed outside help followingmonths of denying it would seek assistance, Rajoy said moreSpaniards will lose their jobs in a country where one out of everyfour are already unemployed. "This year is going to be a bad one," Rajoy said Sundayin his first comments about the rescue since it was announced theprevious evening by his economy minister. The conservative prime minister added that the economy, stuck inits second recession in three years, will still contract thepreviously predicted 1.7 per cent even with the help. Spain on Saturday became the fourth — and largest — ofthe 17 countries that use Europe"s common currency to requesta bailout — a big blow to a nation that a few years ago tookpride as the continent"s economic superstar only to see itbecome the hot spot in the eurozone debt crisis. Its economy is theeurozone"s fourth largest after Germany, France and Italy. Although Spain has not yet said how much money it would seek, theeurogroup — finance ministers of the 17-country eurozone, ofwhich Spain is a member — said in a statement Saturday thatit was prepared to lend up to 100 billion euros. The funds will besent to the Spanish government"s Fund for Orderly BankRestructuring (FROB), which would then use the money to strengthenthe country"s teetering banks. Across the country, Spaniards reacted with a mixture of anger andrelief to the news. The full amount of the eurogroup"slifeline amounts to 21,000 euros of new debt for each person— almost equal to the average salary in a country of 47million where the unemployment rate for those under age 25 is 52per cent. The country is already reeling from deep austerity cuts Rajoy hasimposed over the last six months that have raised taxes, made iteasier to hire and fire workers, and cut deep into cherishedgovernment programs, including education and national health care. "It"s obviously a shame," said civil servantLuisa Saraguren, 44, as she strolled on a sunny Sunday morning withher young daughter. "But this bailout was fully predictable,and the consequences of this help are going to be a lot biggercompared to the cuts we"ve been living with already." Rajoy took pains to avoid the word bailout Sunday, sayingSpain"s rescue package is a line of credit that its mosttroubled banks will be able to tap. The assistance will not comewith the outside control over government macroeconomic policy likethat imposed Greece, Ireland and Portugal when their publicfinances were bailed out. He said interest rates on the loans will be considerably lower thanthe rate near 7 per cent that Spain has been forced to pay recentlyon the international debt markets, a level that forced the othercountries to seek bailouts. German Finance Minister Wolfgang Schaeuble said Spain"s debtto GDP ratio was more favourable that even Germany"s, withSpain at 78 per cent of GDP and Germany"s at 82 per cent. "Spain is making the necessary reforms to improve itscompetitiveness and to limit its fiscal policy to a sustainabledeficit. By the way, Spain"s overall debt (ratio) is lowerthan Germany"s," Schaeuble said. The bailout also spurred Irish opposition finance spokesman MichaelMcGrath to criticize his government for not having negotiatedbetter terms, saying it needed "to start fightingIreland"s corner in a more vigorous and forceful way." Spain will regain the economic credibility it has lost by shoringup its banks, which will result in credit being restored sobusinesses and individuals shut off from loans can start borrowingand the economy will grow again, Rajoy insisted, again withoutsaying when. Europe"s widening recession and financial crisis have hurtcompanies and investors around the world. Providing a financiallifeline to Spanish banks is likely to relieve anxiety on theSpanish economy — which is five times larger thanGreece"s — and on markets concerned about thecountry"s ability to pay its way. Spain"s government will make a formal approach for aid onceindependent audits of the country"s banking industry havebeen carried out. It is not yet clear whether the money will come from Europe"scurrent C440 billion rescue fund, the European Financial StabilityFacility, or the new 500 billion euro European Stability Mechanism. The deal is to be underwritten by the Spanish state, which will usethe FROB as its mechanism to funnel the loan to banks in need.Opposition leader Alfredo Perez Rubalcaba said he had discussed theloan with Rajoy and added that for it not to increase the nationaldeficit the entire amount borrowed will have to be paid back to thetreasury by the banks, "including the correspondinginterests." Economy minister Luis de Guindos said 30 per cent of the bankingsystem needed recapitalization. The IMF in its financial stabilityassessment report said, without listing names, that Spain"stwo large internationally active banks "are welldiversified." It is understood that these are Banco Santanderand BBVA. It said seven former savings banks that have received state support"rely significantly on FROB for capital and liquiditysupport" and that other medium and small private sector bankswhich account for approximately 11 per cent of domestic bankingwere also exposed to the real estate and construction sector. Spain"s financial problems are not due to Greek-stylegovernment over-spending. The country"s banks, particularlyits savings banks or "cajas," got caught up in thecollapse of a real estate bubble in 2008 that got worse over thepast four years. However, as Spain"s leaders have struggledfor a solution to their banking crisis, the country"sborrowing costs have soared close to the level that forced thegovernments of Greece, Portugal and Ireland to seek rescues. Some of Spain"s banks are struggling with toxic real estateloans and assets amid fears the problem will get worse as morejobless people can"t pay their mortgages. The Bank of Spainsays the toxic loans and assets total around C180 billion.Nationalized lender Bankia SA, which has requested 19 billion eurosin aid, has 32 billion euros in toxic assets. Around four otherbanks serving the domestic market were assessed by the IMF reportto have large exposure to corporate and retail real estate lending. "I could never get my mind round the scale of consumption inSpain over the past 20 years, having known it in the 1960s when itwas still extremely poor," said Paul Preston, a historyprofessor and expert on Spain with the London School of Economics."Lots of people enjoyed the consumer boom, but not everybody.Now everybody"s having to pay for it." Rajoy blamed Spain"s woes on the previous Socialistadministration of Jose Luis Rodriguez Zapatero without mentioninghim or his government by name. Zapatero was ousted by Rajoy in alandslide in November by voters outraged over the Socialisthandling of the economy. "Last year Spain"s public administration spent C90billion more than it took in. This can"t be maintained. Wecan"t live like that," Rajoy said. But Socialist Party leader Alfredo Perez Rubalcaba said Rajoyshould acknowledge that Spain is now in bailout territory. "The government is trying to make us believe that we"vewon the lottery, that the Three Kings of Orient have arrived, andthat isn"t so," Rubalcaba said. After his news conference, Rajoy defended his decision to jet offan hour later to Poland to see Spain"s famed nationalfootball team take on Italy in the Euro 2012 competition. He saidhe would be on the ground in Gdansk only for the game before flyingback to Madrid on Sunday night. "I"ll be there 2 1/2 hours and then I"llleave," Rajoy said. "I think the national team deservesit." Rajoy was seen cheering as Cesc Fabregas equalized to give Spain a1-1 draw against Italy. 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