European Central Bank President Mario Draghi has warned that the single currency bloc is unlikely to emerge from crisis until later next year as unemployment in the region continues to soar.
Speaking in Paris yesterday, Draghi said government austerity cuts would continue to rein in growth in the short term.
“We have not yet emerged from the crisis,” warned the ECB chief. “The recovery for most of the eurozone will certainly begin in the second half of 2013. It’s true that the budgetary consolidation entails a short-term contraction of economic activity, but this budgetary consolidation is inevitable.”
His comments came as it emerged that a further 173,000 people had joined the single currency area’s dole queues in October, bringing the total to some 18.7 million.
There were contrasting fortunes for northern and southern Europe. In Italy and Spain the jobless rates rose to 11.1 per cent and 26.2 per cent respectively, from 10.8 per cent and 25.8 per cent the month before.
Meanwhile, unemployment in Germany held steady at 5.4 per cent of the labour force. Austria’s jobless rate fell to just 4.3 per cent from 4.4 per cent in September.
Underlining the bloc’s woes, data showed both German retail sales and French consumer spending falling faster than expected.
However, the eurozone’s inflation fell from 2.5 per cent to 2.2 per cent during November, the latest batch of statistics also revealed.
ECB policymakers hold their regular monthly policy meeting next week and are likely to leave interest rates on hold at a record low of 0.75 per cent. Economists are divided on whether the central bank will cut next year.
Draghi has stressed the ECB is ready to help tackle the crisis by snapping up potentially unlimited amounts of sovereign debt under its new bond-buying plan.