Eurozone Unemployment and Inflation Creep to Record Highs
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Unemployment in the euro zone has risen to its highest level since the introduction of the common currency even as inflation climbed, underlining the challenges facing European leaders as they gather in Brussels for a summit.
Eurostat, the statistics board of the European union, reported yesterday that unemployment rate rose to 10.7 percent in January across the 17 union states, the highest level since the introduction of the euro in 1999.
Unemployment in the euro zone has risen to its highest level since the introduction of the common currency even as inflation climbed, underlining the challenges facing European leaders as they gather in Brussels for a summit.
Eurostat, the statistics board of the European union, reported yesterday that unemployment rate rose to 10.7 percent in January across the 17 union states, the highest level since the introduction of the euro in 1999.
For all 27 European Union countries, the jobless rate ticked up to 10.1 percent in January from 10.0 percent in December, with a total of 24.3 million men and women out of work.
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[quote] The highest unemployment rates were found in Spain (23.3%), Greece (19.9%), Ireland and Portugal (both at 14.8%). [/quote]Additionally, the highest increases were registered in Greece (14.1% to 19.9%), Cyprus (6.3% to 9.6%) and Spain (20.6% to 23.3%).
Across the 27 member states, 5.507 million young persons under the age of 25 were unemployed, with 3.314 million of them from the euro zone.
In contrast, unemployment rate was 8.3 percent in the United States, and only 4.6 percent in Japan.
The job woes were compounded by an unexpected increase in eurozone inflation, with the consumer price index edging up to 2.7 per cent in February – a result of high oil prices brought on by a cold winter.
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Howard Archer, an economist with IHS Global Insights called the reports a ‘double whammy’, adding:
[quote] This is particularly bad news for consumers as they are not only facing high and rising unemployment but also still squeezed purchasing power. The data reinforce our belief that the eurozone is headed for further gross domestic product contraction in the first quarter of 2012 at least. [/quote]Since last November, the European Central Bank has lent out over 1 trillion euros ($1.3 trillion) at low 1-percent interest rates, renewing fears that the growing money supply could lead to high inflation in the next quarters.
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However, with the threat of bank and sovereign debt defaults, monetary policy makers say that loans are necessary to prevent a full-blown crisis, arguing instead that deflationary pressure from declining real estate prices and deleveraging by households and financial institutions is the greater danger.
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