Eurozone jobless at two-year high

[frigidmagi]

BBC

Unemployment across the nations that share the euro rose to its highest level in more than two years last month, as more firms laid off staff.

The eurozone unemployment rate totalled 8% in December, according to the latest official European Union data, up from a revised 7.9% in November.

Unemployment was highest in Spain, which recorded a 14.4% figure.

Meanwhile, eurozone inflation fell in January to 1.1%, its lowest level in almost 10 years, from 1.6% in December.

While Spain saw the highest unemployment last month, the lowest was Netherlands on 2.7%, and Austria at 3.9%.

Fresh rate cut?

The latest unemployment and inflation figures will increase the pressure on the European Central Bank (ECB) to further cut eurozone interest rates to help bolster the economy and bring inflation closer to its 2% target.


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Europe's growing jobless headache

Earlier this month the ECB trimmed rates by half a percentage point to 2%, its fourth reduction since September, when rates stood at 4.25%.

However, eurozone interest rates remain above the current 1.5% in the UK, and between 0% and 0.25% in the US.

The ECB makes its latest decision on interest rates next week, but the bank's president Jean-Claude Trichet has so far hinted that there won't be a fresh rise until March.

Economist Matthew Sharratt of Bank of America said the latest data had put the Bank in a difficult position.

"They [members of the ECB's governing council] have probably put themselves into a corner for next week's meeting," he said.

The eurozone unemployment figures for December do not include Slovakia, which earlier this month became the 16th nation to adopt the single currency.

For the 27-nation European Union as a whole, the unemployment rate rose to 7.4% in December from 7.3% in November.

[frigidmagi]

I meant to include commentary when I post this... Ooops.

My thought is while the EU may benefit from this economic crisis it may also end up doomed by it, especially if the gap between those badly hit by it like Spain and those not so affected like the Netherlands grows. In circumstances like that those badly off may start demanding help from their more affluent neighbors, since everything is relative those neighbors may not be able to afford it nor wish to latch dead weight unto their ships. Another problem is the EU itself doesn't have the power or mechanisms to decide this one way or another and have to evolve in the middle of a crisis. Which could lead to problems of whole nother sort.

That's just a possibility right now however and shouldn't be taken as an iron prediction.