The eurozone, which comprises the 17 nations that uses the euro has seen unemployment rise again to 19.6 million people. The austerity that is being pushed by Germany has not decreased the debts and deficits. Even young people with college degrees face bleak futures in Spain and Greece with youth unemployment at 55%. Many high school and college graduates in Ireland have emigrated to Canada and Australia.
Rising unemployment, higher taxes, weakening wage growth, and tightened credit are eating into household purchasing power and constraining household spending. The subdued global environment and fiscal austerity will affect economic activity in the region.
The euro zone business and consumer confidence index improved in May for the first time in three months but remained very weak, which suggests that the European Central Bank cutting its key policy rate by 25 basis points to a record low of 0.5% in early May has raised confidence somewhat. However, so far the ECB’s actions have not translated into lower lending rates for businesses and households, failing to boost activity.
While Howard Archer at IHS Global Insight, said: “The rise in the Eurozone unemployment rate to a dismal record high of 12.2% in April highlights the fact that the Eurozone continues to face major headwinds and still has its work cut out to return to growth.”
“Consequently, there is ample justification and scope for the ECB to take further stimulative action to try and support Eurozone economic growth, and we expect this to include an interest rate cut from 0.50% to 0.25%. This could even happen as soon as the ECB’s 6 June policy meeting even though the bank only trimmed interest rates from 0.75% to 0.50% in May”.
The president of the European commission the executive of the European Union has called for a focus on growth and jobs after years of austerity, the unemployment for the youth has risen above 50% in many countries. Even Greek , Spanish, Portuguese and Irish students with degrees can only get temporary jobs if they are lucky.
The European Union is continuing along in a slump ever since the financial crisis has started. Instead of debt forgiveness for the PIGS, of Portugal, Ireland, Greece and Spain more debt and austerity were doled with devastating effects on the young especially.
France too has seen a rise in overall unemployment and youth unemployment. Graduates from the the rigid French school system face a bleak future with only temporary jobs, high unemployment and a life on social welfare.