Unemployment in euro zone hits 10%
By Pan Pylas |
January 9, 2010, Saturday
|
Print Edition
Print Edition
UNEMPLOYMENT in the 16 countries that use the euro reached 10 percent in November for the first time since the currency was adopted in 1999, with sharp differences in individual countries' jobless rates underlining the stress the recession has put on Europe's monetary union.
Eurostat, the European Union's statistics office, yesterday said the 0.1-percentage-point rise from October brought the jobless rate to its highest level since August 1998.
Over the past year, it has risen by 2 percentage points as the global recession took its toll, particularly on high-value exports from countries such as Germany.
Spain has the highest unemployment rate at a massive 19.4 percent, while the Netherlands has the lowest at 3.9 percent.
Such sharp divergences mean the European Central Bank, which conducts monetary policy for the euro countries, may face a difficult path ahead in finding one interest rate policy that spurs growth in lagging countries while restraining inflation in stronger ones.
At the same time, Spain along with Greece and Ireland are facing market pressure to get budget deficits back into compliance with EU limits as the recession and the ensuing sharp rise in unemployment have ravaged government revenues. Yet those efforts risk worsening their downturns.
"In other words, fiscal policy is about to reinforce an already extremely severe recession, this being the price of euro membership," said Charles Dumas, an analyst at Lombard Street Research.
Membership of the euro could ensure "unnecessary grief and discord, quite possible a good deal worse," said Dumas.
Nonetheless, euro membership has spared smaller countries the possibility of painful devaluations like the one that accompanied the collapse of Iceland's financial system -- and spurred Iceland to seek EU membership.
Unemployment in the 27-country EU hit 9.5 percent in November.
Eurostat, the European Union's statistics office, yesterday said the 0.1-percentage-point rise from October brought the jobless rate to its highest level since August 1998.
Over the past year, it has risen by 2 percentage points as the global recession took its toll, particularly on high-value exports from countries such as Germany.
Spain has the highest unemployment rate at a massive 19.4 percent, while the Netherlands has the lowest at 3.9 percent.
Such sharp divergences mean the European Central Bank, which conducts monetary policy for the euro countries, may face a difficult path ahead in finding one interest rate policy that spurs growth in lagging countries while restraining inflation in stronger ones.
At the same time, Spain along with Greece and Ireland are facing market pressure to get budget deficits back into compliance with EU limits as the recession and the ensuing sharp rise in unemployment have ravaged government revenues. Yet those efforts risk worsening their downturns.
"In other words, fiscal policy is about to reinforce an already extremely severe recession, this being the price of euro membership," said Charles Dumas, an analyst at Lombard Street Research.
Membership of the euro could ensure "unnecessary grief and discord, quite possible a good deal worse," said Dumas.
Nonetheless, euro membership has spared smaller countries the possibility of painful devaluations like the one that accompanied the collapse of Iceland's financial system -- and spurred Iceland to seek EU membership.
Unemployment in the 27-country EU hit 9.5 percent in November.
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