Spain’s economy continued to shrink at a “significant rate” in the third quarter, the Bank of Spain has said.

Spain is currently in a deepening recession, with the unemployment rate at its highest level since the 1970s.

Economy Minister Luis de Guindos said on Saturday he expected the economy to contract by about 0.4% in the July-to-September quarter.

Bank of Spain has announced that the country’s economy continued to shrink at a significant rate in the third quarter

European markets were trading lower, with concerns about Spain adding to fears over global growth.

Spain’s Ibex index was down 2.3%, while markets in London, Paris and Frankfurt were down more than 1%.

Spain’s borrowing costs also rose, with the yield on 10-year Spanish bonds traded on international markets rising to 5.94% from 5.67%.

The Bank of Spain said in a monthly report: “Available data for the third quarter of the year suggests that GDP kept falling at a significant rate, in a context of high financial tensions.”

The government has introduced highly unpopular spending cuts and tax rises as it attempts to reduce the country’s deficit.

It will present details of an emergency budget and further austerity measures on Thursday.

Separately, French bank Societe Generale said that it had further cut its exposure to Spanish sovereign debt, to 400 million euros ($515 million) by the end of August, from 700 million euros at the end of June.