The Spanish economy contracted again in the first quarter of 2012, after shrinking 0.3 per cent in the final quarter of last year, the Bank of Spain said yesterday, indicating Spain’s return to recession.

In its March economic bulletin, the central bank said the available data for the beginning of 2012 confirms a continuing “activity contraction dynamic” though it did not provide an exact figure.

The first quarter contraction, which had already been predicted by the government and analysts, was mainly due to a decline in private consumption in January and February to levels not seen since 2010, the central bank added.

A recession is officially defined as two consecutive quarters of negative growth.

Prime Minister Mariano Rajoy’s conservative government, in power since December, will table its 2012 Budget on Friday based on a fore-cast that the economy will contract by 1.7 per cent this year after an expansion of 0.7 per cent in 2011.

It has already declared that Spain cannot meet the original deficit target agreed by the previous Socialist government with the European Union of 4.4 per cent of gross domestic product and will budget a 5.3 per cent of output instead.

Spain emerged only at the start of 2010 from an 18-month recession triggered by a global financial crisis and a property bubble collapse that destroyed millions of jobs and left behind huge bad loans and debts.

The country’s jobless total hit 5.27 million people at the end of 2011, pushing the unemployment rate to 22.85 per cent, the highest level among members of the Organisation for Economic Cooperation and Development.