Mariano Rajoy
Mariano Rajoy must tackle Spain's debt problem (Reuters)

In a further sign that Spain is struggling to heal its finances ni the aftermath of the eurozone crisis, the total value of the country's public debt rose to the equivalent of 92.2% of the country's economic output - a record high.

The Bank of Spain says the figure lifted to €942.8bn (£792.5bn, $1.3tn), above the government's target limit of 91.4% even with drastic spending cuts.

These figures are on top of unemployment that now stands at 26% and shows little sign of dramatically falling in the near future.

Spain's embattled government under the leadership of Mariano Rajoy aims to arrest public spending between 2012 and 2014 by €150bn.

However, the soaring level of unemployment and welfare spending which accompanies it makes fiscal tightening extremely difficult.

With many Spanish graduates leaving the country to better job prospects elsewhere, a population wary of austerity, a polarised democratic system and massively indebted state, prime minister Rajoy has one of the toughest jobs of any politician in the eurozone.

Banks Improve

Although unemployment and spending remain far too high, Spain's banking sector has at least shown some signs of improvement.

In August 2012, Spanish banks borrowed €411bn from the European Central Bank after many of them were intimately tied up with financing the construction boom, which threw the country off the fiscal cliff.

Yet the country's banks have reduced their borrowing from the ECB for 12 straight months, drawing down just €249bn in August.