Yikes: Eurozone’s unemployment rate hits a new high
posted at 5:21 pm on March 1, 2013 by Erika Johnsen
As Ed mentioned in his rundown of the Eurozone’s systemic problems earlier this week, Italy as a country just resoundingly voted in rejection of fiscal austerity, and their financial and economic outlook is looking pretty bleak — an outlook just made even bleaker by January’s record-high unemployment numbers released today. Via Reuters:
Italy’s seasonally adjusted unemployment rate jumped to 11.7 percent in January from 11.3 percent the month before to hit its highest level for at least 21 years, data showed on Friday.
The figure was above all forecasts in a Reuters survey of analysts which pointed to a marginal uptick to 11.3 percent. …
Both overall unemployment and youth unemployment were the highest since the current statistical series was begun in 1992.
And that’s not all. Italy’s increasingly poor economic performance combined with all of the Eurozone’s continued economic doldrums has pushed the 17-member bloc’s collective unemployment rate into new territory:
The unemployment rate in the euro zone edged up in January to a new record, official data showed Friday, as the ailing European economy continued to weigh on the job market. …
Unemployment in the 17-nation euro zone climbed to 11.9 percent in January from 11.8 percent the previous month, according to Eurostat, the statistical office of the European Union.
For the 27 nations of the Union, the jobless rate in January stood at 10.8 percent, up from 10.7 percent in December. All of the figures were seasonally adjusted. …
The jobless data “suggest that wage growth is set to weaken from already low rates” and further depress consumer spending, which has already been damped by government austerity measures, Jennifer McKeown, an economist at Capital Economics in London, wrote in a research note.
Europe did pretty well at convincing themselves that the worst of the European debt crisis was over, but was it really just the eye of the storm? These unemployment rates and the recently revised economic growth forecasts for 2013 aren’t going to make austerity measures any more welcome in the eyes of voters — and if Italy and Spain, the bloc’s third and fourth largest economies end up needing bailouts, it could very well spell extended troubles for the eurozone’s prospects, says Robert Samuelson:
The euro crisis is back. Actually, it never left. But there was an extended period, beginning last summer, when Europe’s political, business and media elites convinced themselves the worst had passed. The European Central Bank (ECB) — Europe’s Federal Reserve — had tranquilized jittery bond markets. …
But Italians did send a message. “The election wasn’t just anti-austerity. It was also anti-German,” says David Smick, editor of The International Economy magazine. “Berlusconi’s rhetoric was very anti-German. In Italian politics now, it’s dangerous to appear being the lapdog of [German Chancellor] Angela Merkel.” In one dazzling stroke, Italian voters rejected both Europe’s main response to high government debt — cut spending, raise taxes — and the policy’s most powerful architect, Germany’s Merkel. If Italy needs to be bailed out, the negotiations already look tortuous. …
The amounts required would dwarf the rescues of Greece, Portugal and Ireland. Agreement would be hardly guaranteed. As conditions for aid, the ECB and Germany have insisted on precisely the austerity and structural changes that Italian voters just rejected. Could Italy, backed by other debtor nations, force changes in old policies and, if not, what happens? Europe’s future remains in play.
Breaking on Hot Air