More than 6 million without jobs in Mariano Rajoy's Spain while figure in François Hollande's France is 3.2 million
Unemployment has soared to records in both France and Spain as the impact of government spending cuts and a collapse in consumer confidence forced employers to shed thousands of workers.
Spain's persistent rise in unemployment reached new heights over the first three month of this year, leaving a record 27% of the workforce jobless.
Spain now has 6.2 million unemployed after a 23-month run of falling employment figures, with the young and those living in the south of the country particularly hard hit as the economy continues to shrink.
Almost six out of every 10 people under the age of 25 who are not studying are now jobless, with the rate at 57%.
In France, the number of people out of work reached a record 3.2 million in March in a blow to socialist president François Hollande, who has struggled to stabilise the economy in the face of declining exports and a fall in domestic demand.
The figures triggered a heated debate about Europe's austerity drive with leading IMF and European Central Bank officials sharply at odds.
Some eurozone officials believe now is the time to ease back on debt-cutting drives because calmer financial markets are less easily panicked.
The IMF is also calling for a relaxation in austerity drives – for both the eurozone and Britain – but Germany and the ECB are opposed.
"There is … a risk that Europe could fall into stagnation, which would have very serious implications for households, companies [and] banks," IMF first deputy managing director David Lipton told a conference in London.
"To decisively avoid that dangerous downside, policymakers must act now to strengthen the prospects for growth," he said.
But ECB executive board member Jörg Asmussen urged governments to push on with budget consolidation and reforms.
"Delaying fiscal consolidation is not an easy way out. If it were, we would have taken it," Asmussen said.
"Delaying fiscal consolidation is no free lunch. It means higher debt levels. And this has real costs in the euro area where public debts are already very high."
The ECB is expected by many to cut interest rates next week, although a quarter-point reduction is unlikely to lift the eurozone economy out of recession.
"It will probably require additional unconventional measures from the ECB," Lipton said, while Asmussen said monetary policy was not an "all-purpose weapon".
But German chancellor Angela Merkel intervened in the debate yesterday saying the ECB was "in a difficult position,"
"For Germany it would actually have to raise rates slightly at the moment, but for other countries it would have to do even more for more liquidity to be made available."
Spanish prime minister Mariano Rajoy plans to announce measures on Friday designed to promote growth while keeping public spending cuts in place.
The economy shrank 1.9% over the last year and is not expected to return to growth until the end of this year or 2014.
Analysts agree new jobs will not be created until growth rises above 1%, which seems unlikely until well into next year – by which time 2 million people are likely to have been unemployed for more than three years.
Spain posted Europe's worst budget deficit last year and, although part of that was a one-off €41bn (£35bn) payment to rescue the country's banks, it will still struggle to meet the deficit targets set by Brussels without pushing even more people into unemployment.
This year's deficit target is currently 4.5% of GDP, though that looks likely to be relaxed amid the Europe-wide recession.
Household spending power has fallen to 2001 levels, thanks to a combination of unemployment, falling salaries and increased income and sales taxes, with almost one in three Spanish households now struggling to pay monthly bills.
"This has grown brutally in recent years," said Carlos Susías of the Network against Poverty and Social Exclusion.
In France, a wave of industrial layoffs sent unemployment soaring further over the 3 million level hit last August and the previous all-time record of 3,195,500 set in January 1997.
Hollande reaffirmed his goal to reverse the rising trend, calling on his government to combine with industry and other players to use all means possible to create jobs.
"Everything the government does, in every ministry, must be to continue to strengthen the battle for jobs," he said. "I want all the French people to unite behind this one national priority."
Carmakers headed a list of businesses laying off workers. PSA Peugeot Citroen is scrapping more than 10,000 domestic jobs and rival Renault aims to cut 7,500 posts in France by 2016.
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