How financial crisis in Europe affects the UK's economy

Protest in Spain

Spain and Italy are being urged to act further and faster to tackle their creaking economies.

Their financial crises are threatening the Euro.

It matters because a financial disaster in the Eurozone would hit the UK and could damage our chances of economic recovery.

Newsbeat's Sima Kotecha is in Madrid to get the views of people there and explain how Spain is struggling.

The waterfall in Madrid's Puerta del Sol square glistens under the bright August sunlight.

A couple of toddlers sit around the concrete structure licking huge ice creams which look almost too big for their small hands.

'Can't find work'

This place means a lot to people living in the city.

It symbolises democracy and it's where, in recent weeks, there have been protests against the socialist government and its handling of Spain's plummeting economy.

Raquel Rodriguez
Raquel Rodriguez says her friends are travelling abroad to find work

Raquel Rodriguez sighs in the 35C (95F) heat.

She's 22 and tells Newsbeat she's in desperate need of a job.

"To find work here in Spain now, it's very difficult," she said.

"I studied tourism and I can't find work in restaurants or cafes. It's difficult.

"I have friends who go to Germany and London to find jobs because here it's impossible."

Unemployment is higher in Spain than anywhere else in Europe, according to the European Union's Statistics Office (Eurostat).

Around 4 million people don't have work but the government says claims for unemployment benefit have fallen by 1% in the last month.

Further stats show the youth are severely affected with 45% of 15 to 24-year-olds in Spain without a job.

Slow growth

Economists say it could get worse with more budget cuts likely to be on the horizon meaning less work.

Christina is 17 years old and both her parents are unemployed.

Christina and her friend Maria
Christina and her friend Maria think Europe's single currency is a problem

She's still a student at a school in the city but her vision of her future is bleak.

"It's everyone's fault," she said. "The government, the people. The monetary system is badly organised.

"Maybe France and Germany can help but they're in the same situation."

Spain's economy is in bad shape.

Even though it's the fourth largest in the EU, it's growing very slowly.

The government has severe levels of debt and the high unemployment rate gives people little hope for what lies ahead.

The political climate is also grim with an unpopular prime minister accused of corruption and bad financial tactics.

He's being pushed to call a general election in November but some say the other candidates standing against him are no better.

The Spanish government says it's tackling the country's problems by restructuring banking, pensions and employment laws.

It's not all gloomy news. This week saw the European Central Bank buy some of Spain's debt.

It's hoping this will raise confidence among investors and give more time to other members of the Eurozone to sort out a long-term solution to support the rest of the continent.

Follow Sima Kotecha on Twitter @radio1sima