Employment statistics from BRUSSELS in June 2010 showed that unemployment in the 16-nation euro zone held stable at 10 percent in May 2010, which indicates that the progressive increase in laying off of staff may have peaked. As we all know the economic outlook for the Eurozone and the UK looks bleak as across the region European governments have united in delivering austere public spending programmes and the precise impact is unknown, but certainly does not bode well for economic recovery.
In the UK the Labour Party, now in opposition, has argued fiercely for the UK Government spending package to continue unabated. However it is now perceived wisdom that this is financial suicide. This lack of judgement on the Labour Party’s behalf may have been one of the deciding factors as to their loss of power in the May 2010 UK National Elections.
The European Union’s (EU) statistical office reflects as expected that movements in producer prices have remained subdued during the month of May 2010. Thankfully this means inflationary pressure remains low. Euro stat reported said almost 16m jobless in the euro zone in May, an increase of just 35,000 more than April 2010.
The New York Times reports Reuters’ survey of analysts had anticipated unemployment to peak at 10.1 percent, – the largest volume of adults out of work for nearly 12 years. NY Times also quote Howard Archer, chief European economist at IHS Global Insight, who indicates that he sees economic recovery as contributing to the unemployment slowdown.
Europe’s biggest economies did well (considering). The leading European economy, Germany’s unemployment changed negatively by just 0.1 percent, and France and Italy managed to stay constant. This is a fantastic achievement but we will have to see the real impact of the austerity measures. However unemployment has now reached 20% in crisis-hit Spain, almost the same as Latvia. Spain is now a threat to the stability of the Eurozone like Greece, and Portugal and Ireland may be next. The instability of the Euro may have a further negative impact on the UK. The Eurozone represents 16% of UK Trade, but this figure does not include the invisible earnings of tourism etc. I suspect full 27-nation European Union looks on enviously at Austria whose unemployment is running at below 5 percent.
The German economy has been stimulated by German federal industrial subsidies which had kept many workers employed. In 2011 these subsidies will be withdrawn.
Unemployment is an financial indicator but it always lags behind recovery and growth.
Business Analysts and Finance Experts all understand economies need strong consumer demand to make economic recovery self-sustaining.
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