‘Nothing short of woeful’: 18m out of work in the eurozone

By GARETH MACKIE
Published on 01/08/2012 00:21

UNEMPLOYMENT in the eurozone hit a record high in June, increasing the likelihood that policymakers will do more to tackle the region’s debt crisis.

Official figures released yesterday showed a total of 17.8 million people across the eurozone were out of work in June, an increase of 123,000 on the previous month and the highest figure since the single currency was formed in 1999.

Howard Archer, chief UK and European economist at IHS Global Insight, described the figures as “horrible” and said the jobless rate, which currently stands at 11.2 per cent, could hit 12 per cent next year.

June’s figures included some wide variations, with unemployment as low as 4.5 per cent in Austria but 24.8 per cent in Spain, the highest level in the region. Spain slid deeper into recession in the second quarter as a tough new round of austerity measures affected overall demand and the prices consumers pay for goods.

Hopes have risen in recent days that Europe is preparing new measures to handle the crisis. Last week, European Central Bank (ECB) president Mario Draghi said the bank “is ready to do what it takes to preserve the euro”.

Many economists believe the ECB will restart its bond-buying programme with purchases of Italian and Spanish debt, and a move could be announced at the central bank’s rate-setting meeting tomorrow.

However, some analysts have warned that expectations of bold action may have risen too high. Chris Beauchamp of IG Index said there was a “tinge of nervousness” that Draghi may not live up to his promises.

Michael Hewson, markets analyst at CMC Markets, said: “Irrespective of what happens on Thursday and whether Draghi delivers or not, the economic data out of Europe is nothing short of woeful.”