By: Dr. Mike Campbell
It seems strange to talk of a downturn in the European economy because it hardly seems that there was a recovery following the global financial crisis, but if you look at the data, the case can certainly be made. Behind the figures of sagging demand, anaemic growth and austerity cuts, the lives of real people take a buffeting in these strained economic times.
Unemployment within the Eurozone’s 17 nations has hit a record high of 10.4% in December, up from 10.3% a month earlier. Over the course of the year from December 2010, 751 000 Eurozone citizens lost their livelihoods, data from Eurostat reveals. The percentages equate to some 16.5 million people being “officially” out of work in the Eurozone region.
The unemployment rate is anything but even. Austria enjoys the position of having the lowest level of unemployment within the Eurozone at 4.1%; whilst in Spain, 22.9% of the workforce is idle – the young are often hardest hit.
In the wider EU, unemployment across the 27 nations is at 9.9% or 23.8 million people. The prospects for 2012 continue to look bleak with weak growth or contraction on the cards. The on-going problem of the European sovereign debt crisis is leading to higher levels of uncertainty. Businesses are reluctant to take on new employees in uncertain economic times. It is likely that the employment situation will continue to deteriorate across Europe as austerity measures, designed to erode the mountains of debt that nations find themselves under, bite deeper.
The debt crisis is really about the perception in the markets that certain nations will default on their debts. This pushes the cost of borrowing higher, wasting more and more money to service the debts – just like a householder whose credit card spending has spiralled out of control. Debt has become the obvious elephant that politicians can no longer afford to ignore. The budget cuts are the only way to reduce debt – or at any rate, the accrual of even greater debts – since growth and higher revenues seem impossible right now. However, the tightening of belts means that the economy will be squeezed and jobs will be lost in both the public and private sectors. A balance is clearly called for.